African Thoughts: September 09, 2013

The Risk switch was turned on around the globe last week with developed markets rallying quite nicely. There were some mixed fortunes on the African continent, and as per usual we take a look at some of the best and worst performing markets from across our universe.

Mauritius:

The rally in Mauritius continued last week, albeit ever so slightly with the Semdex gaining 0.3%. The move higher was led by hotel stocks as the likes of NMH (+2.3%), Lux Island (++2.6%) and Sun Resorts (+0.7%) all put in solid performances for the week. The two major banking stocks however mitigated the move higher somewhat as MCB fell -0.8% while SBM fell -1.0%. One point of significance to take note of was a rather large cross on Friday of about 70m SBM at Rs1.04. The MCB floating-rate notes gave activity a boost as well as there were two large crosses over the course of the week. On an economic front, inflation for August fell to 3.5%.

Zimbabwe:

There was finally some light at the end of the tunnel in Zimbabwe after a rather ruthless sell-off with the Industrial Index gaining 0.05% after a rally towards the end of the week (+2.7% on Friday). The Mining Index was however softer, falling 4.00%. Market heavyweights Delta (+2.8%) and Econet (+1.02%) were the main drivers behind the bounce as OK Zimbabwe also managed to close the week in positive territory. Foreigners were pretty evenly weighted in Delta from a net flow perspective while they were unfortunately still net sellers in Econet for the week. One does however get a feeling that investors are still very cautious with regards to Zimbabwe, but hopefully as things start to stabilize that will change sooner rather than later.

Kenya:

Some positivity returned to the market in Nairobi last week with the NSE 20 Index gaining 0.20% as there was a late surge towards the end of the week. The Central Bank’s decision to hold the Central Bank rate at 8.5% also added impetus to the move higher. A very interesting point to note was that Kenya Commercial Bank had the highest foreign investor inflows ($1.32m) while Equity Bank saw the highest foreign investor outflows ($1.6m). From an activity point of view East African Breweries dominated proceedings with a number of large crosses throughout the week with the brewer also managing to rally a very respectable 4.2%. Safcom was another blue chip to stage a bit of a rally with the telco gaining 1.9% with foreign participation driving activity. Nation Media Group posted a 24%y/y increase in H1 2013 profits to KES 1.1bn while Mumias Sugar posted a 183% decrease in FY 2013 results. During last week’s visit to Kenya, Aliko Dangote, founder of the Dangote group, noted that he intends to invest USD 400m (KES 34bn) in the local cement sector through a planned plant at the coast.

Nigeria:

The Nigerian market tried to get going last week (from an activity point of view), but was still relatively quiet. On a positive note the market managed to close the week on the front foot as the ASI gained 0.49% with some interest returning to banking stocks (+0.05%). Consumers on the other hand continued to come under pressure with the Consumer Goods Index falling -0.31%. There were significant crosses in the likes of WAPCO and Dangote Cement throughout the week while some good two-way flow was witnessed in Nigerian Breweries, Guaranty Trust Bank, First Bank and Zenith Bank with foreigners relatively prevalent in the names. Things were also very quiet in terms of news flow as Nestle released a Q4 2013 profit forecast with PAT of N5.786bn.

Egypt:

The market continued to trade with a mixed sentiment to end the week lower, with the EGX30 falling 1.72%. Market volumes remained suppressed throughout the week with the international investment community still very uncertain with regards to Egypt. The likes of ETEL, HRHO and ERSR witnessed selling pressure from foreign investors, while local institutions continue to be net-buyers in the market, targeting names such as ACGC, EFIC and OCDI.