African Thoughts: March, 2017


Things went from bad to worse on the activity front in Lagos with turnover falling -24.6%, from a low base, to $117.63m with a few crosses in the likes of Zenith and NB after the market heavyweights released FY 2016 results, driving proceedings. The market also continued to come under pressure with the ASI falling -2.72%, taking the YTD loss to -5.75%. Consumer stocks were the major drag on the market as the sector fell -11.03% with some heavy losses in Nestle (-21.60%), Unilever (-18.37%), 7UP (-10.79%) and Cadbury (-9.43%). The banking sector closed the month unchanged with good performances in UBA (+4.82%) and GTB (+4.22%) while Zenith (-6.37%) and ETI (-1.87%) closed lower. On the economic front, consumer prices for January increased +18.72% from +18.55% in December. The National Bureau of Statistics released 2016 GDP figures which showed that the economy contracted by 1.5% last year. The Central Bank of Nigeria changed its foreign exchange policy with the reduction of the tenor of its forward sales from the current maximum cycle of 180 days to 60 days from the date of transaction.


After a torrid January all NSE indices recovered dramatically in February. The NSE 20 climbed by 7.17% while the NASI rose by 2.18%. However, these indices are still down 6.02% and 6.34% YTD respectively. Foreign participation was at approximately 80% of total market turnover and was heavily skewed to the buy side. We also some some decent days of activity with Safcom heavily dominating the flows. The telco ended the month down 4.05% at KES 17.75. There was also some pleasing action in the banks as they finally reversed recent weaknesses. EqBnk jumped by 8.25% to KES 26.25 while KNCB closed up 9.78% at KES 25.25. EABL ended the month up just 45bps at KES 225.00 after reporting in-line 2017 H1 results. Other companies that reported during the month included Stanbic Bank, Barclays Bank, Kenya Power and BAT Kenya.


The Industrials fell by another 3.52% last month (now down 6.38% YTD) on yet another month of dismal trading volumes. The main laggard was Econet which fell by 17.01% to 14c. The reason for this fall was the approval of the USD130m capital raise exercise via a rights offer at the EGM in early February. Among the other larger cap names there were losses in the likes of Delta (-7.78%, 82c), Seedco (-5.94%, 95c), Innscor (-2.27%, 46.90c) and Old Mutual (-1.71%, 344.75c). During the month we saw CBZ release FY16 results.


The Mauritian bourse continues to be one of the best performing markets on the African continent as the Semdex extended its gains in February, closing the month +2.2% higher, taking the YTD gain to +6.3%. IBL was the best performing stock for the month as the name gained +15.2%. MCBG also had a very good month and reached an all-time high of Rs228, eventually closing the month +2.25% higher, while banking counterpart SBMH fell-0.85%. Hoteliers had a mixed month with SUN gaining +1.54% while NMH fell -0.95%. It was an average month on the activity front with total value traded amounting to $21.44m with MCBG and SBMH jointly accounting for 54.4% of total turnover. On the economic front, the Bank of Mauritius’ Monetary Policy Committee kept the Key Repo Rate unchanged at 4.00%, while they have maintained their projection of GDP growth between 3.8% - 4.0% for 2017 and headline inflation of 2.5%. Monthly tourist arrivals for January increased +5.0%.

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


•  EGX dropped 5.8% in Feb on ADV $64.5mn
•  Investors switch from names with dollar earnings into consumer names with FX cost as EGP appreciates (DOMT and JUFO rallied 28% and 17% respectively)
•  Talks of re-imposing stamp duty tax, at higher rate of 175bps, weighs on market performance and activity
•  Foreigners ended the month as net sellers for the 1st time since the devaluation, thanks to GTH’s share buyback
•  GTH dropped 12.7% post completing the 10% share buyback as GDR holders were forced to convert to Ordinary shares after EGM approved the cancelation of the program
•  CBE left its key interest rates unchanged, overnight deposit rate at 14.75% and its overnight lending rate at 15.75%


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