Global and local market conditions
The main emerging stock markets rallied strongly this week. The Sensex of India was up 1.99%, the Shanghai Composite Index rose by 2.47%, and the Bovespa Index (Brazil) by 2.98%. South Africa’s JSE all share index rose by 4.13%. The developed markets dipped slightly likely because of profit taking after four straight weeks of gains. The Nikkei (Japan), the S&P 500 and FTSE 100(UK) Indexes fell by 0.71%, 0.21% and 0.10% respectively.
In the emerging Africa, Nairobi’s NSE-20 Share index rose by 1.19%, Ghana’s All Share by 4.18% and after a several weeks of decline, Nigeria’s All Share index eked out a 1.59% gain, driven by a slight bounce bank in banking sector stocks.
Accra, Ghana
GSE Movers
Top gainers
Ecobank Ghana +12.46%, Golden Star Resources +7.78%,
Top losers
Produce Buying Company -6.67%, UT Bank Limited -3.85%
Golden Star Resources
The three week rally on this counter is likely driven by news of the continued rise in the price of Gold in world markets. Gold rallied this week to an all time high of $1,317 per 100 ounce.
Dar es Salaam, Tanzania & Kampala, Uganda
DSE & USE Movers
Gainer
National Insurance Corporation +4.29%
Loser
National Microfinance Bank -1.43%
National Insurance Corporation
National Insurance Corporation is the biggest life insurer in Uganda. The company has branch and agency offices across the country and plans to open an office in Southern Sudan where it already writes some business. The current share price translates to a PE of just 7.4. The share is a long term buy: the cheap valuation and the huge potential for future growth given the low insurance penetration in the country provide a significant margin of safety.
Lagos, Nigeria
NGSE (Top 100 Market Capitalization stocks)
Top gainers
Skye Bank + 21.61%, Diamond Bank +17.78%
Top losers
Unity Bank -23.91%, Ashaka Cement -20.82%
Skye Bank
Most Nigerian banking stocks rallied this week; a part-reversal of the steep sell-offs over the previous several weeks. Banking sector stocks, which comprise a large portion of the total stock market capitalization, were badly hit by Nigeria’s domestic banking crisis. The recent upheaval at the stock exchange culminating in the departure of its chief executive has not helped. The stock market in Nigeria is extremely volatile and is likely to remain so until at least after the January 2011 presidential elections are concluded.
Nairobi, Kenya
NSE Movers
Top gainers
Scangroup +11.50%, Kenya Commercial Bank +7.97%
Top losers
Crown Berger -5.81%, KenGen -3.80%
Scangroup
Scangroup continues to rally strongly after the announcement of plans to acquire 51% of Ogilvy’s African business through a share swap transaction. The deal will give Scangroup an even bigger share in its market leading position in Kenya and a foothold in several African advertising markets. The full financial impact of the deal is not yet clear: the rally on this counter appears to be mainly momentum driven.
Kenya Commercial Bank
KCB is one of our conviction picks (see September 3, 2010 report). Even after the jump in price this week, the share is cheap in relation to its peers. The Friday closing price of Kshs 21 translates into a market capitalization of Kshs 62 Billion for KCB, compared to Kshs 99B for Equity Bank, Kshs 92B for BBK, Kshs 74B for StanChart, Kshs 64B for CO-OP Bank. KCB is ahead of all its rivals in terms of branch network, total deposits and total assets. Of the big banks in Kenya only BBK is more profitable.
