Global and local market conditions
U.S. stocks on Friday surged to their fourth straight weekly gain, with the Dow Jones Industrial Average and the S&P 500 Index both on track for their best September in more than half a century after data showing a rebound in demand for U.S. capital equipment (MarketWatch). Most global markets performed strongly in the week. India’s sensex index passed the 20,000 mark, and is now trading at a 32 month high. There has been a heavy inflow of funds into India’s equities markets from international investors who have bought into the country’s growth story. Brazil’s Bovespa Index was up 1.65%. A record share sale by Petrobas has catapulted the Bovespa into the second most capitalized financial exchange in the world after the Hong Kong Exchange (Wall Street Journal).
The situation has not been so upbeat in Sub-Saharan Africa. The Ghana, Nigeria and South African All share indexes dropped by 1.84%, 1.33% and 1.08% respectively. Kenya’s NSE – 20 share index eked a 0.70% gain in the week.
Accra, Ghana
GSE Movers
Top gainers
Golden Star Resources +18.42%, AngloGold Ashanti +9.52%
Top losers
Produce Buying Company -11.76%, Ecobank Transnational -6.67%, Mechanical Lloyd -5.80%
Golden Star Resources
The rally in the two gold miners continued from the previous week. Gold is trading at an all time high breaking the $1,300 an ounce barrier. The gold rally this week was driven by a weak US dollar and momentum buying. Gold prices are likely to stay at an elevated level in the long term due to rising demand from increasingly affluent buyers from the Middle East, India and China who treasure the metal for jewelry.
Dar es Salaam, Tanzania & Kampala, Uganda
DSE & USE Movers
Top gainers
Swissport +3.17%, National Microfinance Bank +2.86%
Loser
Stanbic Bank Uganda -2.08%
Swissport
Liberalisation of the airport services business is likely to have a long term negative impact on the company. In the next several years the company should benefit from the general trend in air traffic growth across Africa and in Tanzania. The low valuation of the company, a PE of 5.7 and the high dividend yield, 7.17% (based on June 2010 half year results) mitigate the flat growth and potential risks from liberalization on the industry.
Lagos, Nigeria
NGSE (Top 100 by Market Capitalization)
Top gainers
AIICO Insurance +24.24%, Dangote Flour +22.28%, Unity Bank +21.05%
Top losers
Starcomms -10.05%, Bagco -9.95%, Skye Bank -8.82%
AIICO Insurance Plc
AIICO is one leading multiline line insurance companies in Nigeria. The company reported a 66 percent increase in profit for the year through December. Net income advanced to 1.04 billion naira ($6.9 million) from 624.8 million naira a year earlier. Even after this week’s huge jump in share price down 31.25% in the year to date.
Starcomms
Starcommons is Nigeria’s 4th largest telecommunications operator. Despite rapid subscriber and earning growth the company made losses in 2008,2009 and in the first half of 2010. The performance of this company has been bogged down by huge interest payments and foreign exchanges losses which have far exceeded the operating profit.
Nairobi, Kenya
NSE Movers
Top gainers
KenolKobil +16.09%, Rea Vipingo +7.27%
Top losers
Unga -6.36%, Safaricom -4.30%
KenolKobil
KenolKobil was listed among three conviction picks in our report for the week ended September 3, 2010. The share price leaped on an announcement that the company and the Kenyan energy sector regulators have come to an agreement on the long standing refinery dispute. Although the full details of the agreement are not yet clear, a major cloud on this counter has been lifted. Barring unforeseen events the share should continue to rally strongly in the coming week.
Quote of the week
“The minute you get away from the fundamentals – whether it’s proper technique, work ethic, or mental preparation – the bottom can fall out of your game, your schoolwork, your job, whatever you’re doing.” -Michael Jordan
