African Thoughts: September 10, 2012

With last Monday the US Labor Day holiday the week started off on a slow note. However, as expected, the traditional September pick up in activity became evident as the week progressed. Risk got a nice shot in the arm from Draghi as he once again stated that the Eurozone would do anything to keep the Euro together. Markets reacted positively to this as almost all global markets closed in the black. As always in Africa, performance was a bit mixed although mostly we saw buying action return in most markets.

Good:

South Africa:

South Africa/Namibia: As is almost always the case, Namibia tracks the JSE and the JSE trends along with world markets. The Draghi comments about buying EUR bonds gave global markets some decent buoyancy which pulled SA and Namibia along with it. This was all despite a slow start to the week after US Labor Day. Interesting, the sectors that were the top outperformers were Resources (+4.8%), Golds (+7%) and Plats (+4.3%).

Nigeria:

Nigeria (NSE ASI +4.58%): The Lagos bourse reached a 1-year high last week as all sub-sectors closed the week in the black. Banking (+7.10%) and Consumers (+3.98%) found the most buying support. The Banking sector was again the most active with a large cross going through in Union Bank ($80mill, AMCON related) while particularly Tier 1 banks found some strong interest from local and foreign participants. Volumes in just Union Bank, UBA, and First Bank accounted for 72.66% of the weekly turnover. Some of the top gainers for the week included Flour Mills (+15.68%), Nigerian Breweries (+3.66%), Cadbury (+23.25%) and Unilever (+5.94%). The 2 main themes for the week though were renewed foreign buying in Tier 1 banks and the large cap consumers.

Zimbabwe Industrial:

Zimbabwe Industrial (+3.76%): Bullish trading on the large caps in Harare led the market north by 3.76% for the week. The week also saw some heavy trading with the weekly turnover totaling $7mill. Most of the buying activity was driven by foreign participants. Econet drove up an impressive 7.08% to close at 4.2501 while Delta (+5.63%) and Innscor (+10.09%) also displayed strong demand from foreign participants. Innscor released their FY12 results which rewarded shareholders with a 1c dividend and the stock closed at a 1-year high of 60c. Their subsidiary Colcom also posted a reasonable set of results declaring a 0.60c dividend and the share price improving by 13% to close at 26c. Aico closed up 17.65% at 10.00 as investors await clarity on the planned demerger of its subsidiaries to address the long running capitalization issues. The biggest gainer for the week was Cairns. The struggling food processing and packaging group rose to 0.70 (+40%) after major shareholder RBZ announced it would retender its disposal of their shareholding.

Egypt:

Egypt (+2.17%): A strong week in Egypt on good volume, driven higher by the positive news on loans from both the IMF and the investment from Qatar. The positive sentiment about the improving FDIs lent support to the market.

Kenya:

Kenya (NSE20 +88bps): The Nairobi NSE20 rose by 88bps while the NSE All Share rose by 1.46% for the week under review. The big news of the week was the MPC decision to reduce the Central Bank Rate (CBR) by 3.5% from 16.5% to 13%. Most economists predicted a large decline but the size of the decline was somewhat larger than expected. As such, equities saw some renewed interest and this was evident in the pick up in volumes for the week. The banking sector was once again well supported (+1.2%) highlighted by NIC which closed up 6.2% for the week. Equity Bank and KCB saw strong foreign interest and closed at 22.25 and 26.25 respectively. EABL also saw some large participation from foreign investors and closed up 1.77% at KES230. Safcom also saw strong foreign buying and closed up 5.26% at KES4.00.

Botswana:

Botswana, the first week of automated trading ended successfully, with overall market excitement boosted by increased hours of trading. The total turnover for the week was P11.1 million, anchored by Letshego which remains the most traded stock by volume. Weekly gains to keep the momentum on the DCI were recorded in Sechaba which put on 3.7% to close at 1400t, Choppies went up by 1.8% to settle at 168t and Engen put on 1.66% to end the week at 610t. Amongst the shakers were Primetime which shed 2.5% to close at 195t, FNBB lost 1.7% to settle at 290t and NAP gave away 1.4% to close at 217t. Going forward we expect the market to be driven by the first half earnings reporting season which has gotten into full swing, with announcements so far having been made by ABCH, Primetime, NAP, Sefalana and Imara amongst others. Insurance giant BIHL and most of the banks are expected to announce any time soon.

BRVM:

BRVM: The BRVM index was led higher by most sectors with Petroleum (+2.94%), Infrastructure (+1.90%), Distribution (+1.72%), Transport (+1.06%) and Banking (+0.79%) the 5 sectors that closed higher for the week. As always, Sonatel was the most actively traded accounting for 76% of the weekly flows. The name closed the week unchanged at XOF115,000.

Mauritius:

Mauritius (SEM7 +0.6%): Some chunky action in Mauritius last week, particularly in the banks. MCB closed up 60bps at Rs163 on good volumes while SBM closed unchanged at Rs82. Bramer Bank also saw some large activity and closed up 9.4% for week at Rs7.00. In the hotels sector, NMH recovered from a poor week to close up 5.3% at Rs60 while Lux Island and Sun Resorts closed down 2.4% and 70bps respectively. Air Mauritius also had a torrid week with the name closing at Rs9.50 (-3.1%). In the sugar sector, Omnicane rose by 2.7% (Rs76) and ENL closed down 1.8% at Rs38.30. In other news, it was announced that CIM Financial Services will list on 30 October 2012.

Bad:

Zimbabwe Mining:

Zimbabwe Mining (-94bps): In contrast to the Zim Ind index, the Zim mining index was among the worst bourses in Africa last week. Hwange (21.5c, -2.27%) and Bindura (2.99c, -33bps) were the stocks at the heart of this.