African Thoughts: September 30, 2013

As the third quarter of the calendar year draws to close global markets seem very unsure as to which direction the next big move will be. We saw this in both volumes and uncertainty as markets were weaker in general on very low volume. As per usual we take a look at some of the best and worst performing markets on the African continent from last week.

Mauritius:

The Mauritian market was very dull from an activity point of view while the Semdex fell 0.18%. Banking stocks ended the week mixed with MCB falling 0.3%, SBM ended unchanged while Bramer Banking was the best performer in the sector and managed to gain 2.9%. The dull activity could also be attributed to the fact that foreigners were net sellers in Port Louis to the value of $380k. As per latest report published by Statistics, GDP growth for the year has been revised to 3.2% (lower than the 3.3% forecasted in June 2013).

Kenya:

A slowdown in foreign activity (foreign inflows fell 40% to $4.8m) seemed to be behind the fall in turnover (-26%) in Nairobi last week as value traded amounted to $24.30m. The tentative stance with regards to Kenya was however expected after the horrific terror attacks at the Westgate Mall over the weekend where terrorist laid siege and took hostages. On the positive side, the NSE 20 Index managed to gain 0.30%. Safcom was one of the few names worth mentioning as the telco drove activity (34.2%) with a number of large crosses taking place throughout the course of the week. There was however some profit taking with the name falling 1.8% to close at KES 8.35. Foreign investor demand was behind the strong moves higher in both EABL and KNCB as the names rallied 4.6% and 3.3% respectively. Today is the book closure date to trade cum-div (KES 4.00) in EABL.

Nigeria:

The theme of low activity and investor apprehension continued in Lagos last week with volumes very low and investors being very selective with regards to how they traded, and therefore the rally in the market (ASI +0.69%) should be taken with a pinch of salt. Consumers were the main drivers behind the market’s strength as the Consumer Goods Index gained 1.46%. Glaxo Smith Kline was one of the star performers in the sector as the name rallied an impressive 7.81% to close the week at N69.00 (highest since 2 January 2002). Nestle (+5.32%) also put in a solid performance as foreign demand was behind the counter’s rally. Banking stocks were however a drag on the market with the Banking Index falling 0.47% after the Monetary Policy Committee decided to keep both the CRR and policy rate unchanged at 50% and 12% respectively. UBA was one of the worst performers in the sector as the name fell 3.89%. Trading on the new trading platform X-Gen starts today and it will be interesting to see whether or not there are any teething problems. The market will be closed tomorrow for a public holiday. Please see attached the structural changed to the new trading platform in Nigeria.

Zimbabwe:

The Zimbabwean market performed exceptionally well last week with the Industrial Index gaining 2.85% while the Mining Index gained 3.23%. Blue chip counters pushed the market higher with the likes of Econet and BAT gaining 12.71% and 4.6% respectively as foreign interest starts to return to the market. Delta ($14.9m) was on fire in terms of activity and accounted for the majority of value traded last week as there were two large crosses on Thursday and Friday. Further good news was the announcement that Zimbabwean diamonds can now be sold to the Antwerp Diamond Centre in Belgium which accounts for more than 50% of global trade in rough and polished diamonds.

Egypt:

The market managed to close the week on the front foot with the EGX gaining a very impressive 3.96% to close at 5,704.00. Value traded was also on the rise for the week with foreign interest starting to return. With the economic and political situation fairly stable the EGX30 continues to gain a notable positive appetite. Local retail investors continue to build positions in names such as PIOH, UEGC while institutional investors had appetite in names such as ETEL, TMGH and COMI.