African Thoughts: May, 2017


The Nigerian bourse found some strong momentum during May. The initial strength came from foreign buyers although local funds jumped on the bandwagon and continued the trend. The ASI rallied by an impressive 14.48% for the month and is now up 9.76% for the year thus far. Leading the charge was the Banking sector which climbed by 26.02%. The leading lights were FBNH (N5.30, +67.19%) ETI (N10.60, +37.48%), UBA (N7.50, +28.87%), Guaranty (N34.01, +27.71%), Zenith Bank (N18.95, +27.18%), Diamond Bank (N0.97, +22.78%), FCMB (N1.15, +19.79%) and Access (N7.96, +19.70%). Consumers also had a solid month and rose by 19.11% with gains recorded in the likes of PZ (N18.70, +25.34%), NB (N149.50, +21.53%), GlaxoSmithKline (N17.00, +20.65%), Nestle (N875.01, +20.36%), Guinness (N71.00, +18.31%), Unilever (N37.49, +17.86%) and Flourmills (N21.00, +16.67%). What was also pleasing to see was an uptake in trading volumes with most days seeing more than $10m change hands – we haven’t seen these volumes in a very long time. In economic news we also witnessed the MPC keep the benchmark rate unchanged at 14.00%.


It was a decent month on the activity front in Kenya with total value traded for the month amounting to $158.3m with market heavyweight Safcom completely dominating proceedings while there were also the odd crosses in the likes of EABL, KNCB and EQBNK. It was a very impressive month on the performance front with the NSE 20 Index gaining +8.98% thanks to solid gains in market heavyweights KNCB (+26.19%), Safcom (+15.58%), EQBNK (+15.15%) and EABL (+4.78%) as locals seem to be returning to the market. On the economic front, the Central Bank kept the benchmark rate at 10% despite inflation hitting a five-year high of 11.70%. The increase in inflation was largely attributed to the rise in food inflation.


Aggressive local buyers drove the ZSE Industrials massively higher in May. The index rose by 13.56% for the month which now puts the index into positive territory for the year to date (+12.32%). Part of the reason for the local buying is that investors have had their fixed income investments mature and there is a lack of investable opportunities in that asset class which means they are once again looking towards equities to put their cash to work. Econet was the major highlight as the telco rebounded by 69.07% to 30.50c. Innscor (at 60c), Delta (at 95.49c) and BAT (at 1,665c ) added 27.82%, 10.71% and 8.82% respectively while most other stocks also closed in the green. Total Turnover also showed an impressive appreciation from $11.21m to $17.64m although the bulk of this was local investors.


The Semdex rose by 2.9% in May thereby extending the YTD gains to 14.8%. The story of the month (on all fronts) was MCBG which continued to hit fresh record highs and closed the month up 9.3% at Rs250.00. The lion’s share of turnover on almost every trading day also went through in the name. In general though, trading volumes were slightly more muted than we have seen in recent months. In economic news, the MPC kept the Key Repo Rate unchanged at 4.00% while tourist arrivals for April 2017 showed a significant 21.1% increase from April 2016. However, part of this can be attributed to the Easter holidays which fell in April 2017 and in 2016 the holidays fell in March.

Please note that the index figure above is correct at the time of writing.


•  EGX30 advanced 7.3% in May on ADV $55mn
•  Uptick in foreign activity, driven by passive funds’ flows on the back of MSCI rebalancing
•  MSCI SAIR changes, effective May 31st: HRHO (c$44mn inflow) to replace TMGH (c$29mn outflow) in standard index and ETEL was added (+c1.2mn) to SC replacing SVCE (-c$1.2mn)
•  Earnings season is almost over, with some positive surprises across RE and financials
•  RE and Banking names led the risers, while names with high debt like CCAP, ARCC and AUTO underperformed
•  Egypt raised $3bn in EB sale that was heavily oversubscribed, at a lower cost than the one sold in Jan 2017.
•  CBE surprises with 200bps rate hike, following IMF comments on need to fight inflation
•  Trading hours change during Ramadan: 9:00-12:30 UK time
•  Egypt's parliament approves 12.5bps stamp duty tax, increasing 2.5bps/annually till reaching 17.5bps in the 3rd year. The measure still needs to be signed off by the president and published in the Official Gazette
•  Foreign Investment in Egyptian Treasuries increased 13% to $7.5bn


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