Global and local market conditions
Stock markets rallied strongly across the world on the Fed’s announcement of a further $600 Billion in economic easing measures. The S&P 500 (US) rose 3.6%, the FTSE 100 (UK) 3.5%, the Sensex (India) 4.86%, the Bovespa (Brazil) 2.74%, the Johannesburg All Share 3.37% and the Shanghai (China) composite by 5.1%.
The Frontier Africa stock market indexes did not follow the global trend. The NSE 20 Share Index was down 0.16%, the Nigerian All Share Index fell by 0.97%. The Ghana All Share rose by a paltry 0.41%.
Commodities rose strongly across the board. Crude oil was up 5.5%, Gold 2.95%, High Grade Copper Nov Settlement (COMEX) 5.68%, White Sugar December Futures (LIFFE) 7.40%, and Palm Oil 5.71%.
Accra, Ghana
GSE Movers
Top gainers
AngloGold Ashanti +17.24%, Enterprise Insurance Company +7.96%, CAL Bank +6.67%
Top losers
Aluworks -11.76%, SG-SSB -6.67%, SIC Insurance -5.56%
AngloGold Ashanti
AngloGold’s share price has leaped this week after holding steady for the past six weeks. In that period the price of Gold has continued to edge upwards. Gold prices are at all time high; rising 8% over the last six weeks to USD $1,397.70 per 100 ounce. Goldman Sachs recently raised its 12 month gold forecast to $1,650 per 100 ounce, an 18% upside from current levels.
Surging gold prices will boost the profits and in turn the share prices of gold miners such as AngloGold.
Nairobi, Kenya
NSE Movers
Top gainers
Eaagads +31.85%, Scangroup +8.11%, Rea Vipingo Plantations +7.84%
Top losers
Standard Group -7.18%, Housing Finance -6.48%, KenGen -4.97%
Standard Group
The current week’s drop in Standard Group’s share price is not unexpected given the volatile price movement of this counter. Standard Group’s share has been trading in the Kshs 43.50 to 48.50 range in the past eight weeks. A rise in one week appears to be followed by a drop in the following week.
Standard Group reported a 139% increase in profits for the six months to June 2010, compared to the same period in 2009. The counter is cheap on a PE ratio basis: 8, compared to the roughly 14 for the market as a whole.
Kenya Airways
Kenya Airways reported a 67% rise in half year profits confirming our November 1 projection that the company was likely to report good results in line with global industry performance. The performance was extremely good given that the half year to September 2009 was boosted by a Kshs 1.7 Billion gain in fuel derivatives: operating profit was Kshs 2.4 Billion in 2010 compared to Kshs 162 Million in 2009.
If KQ replicates the second half of 2009/10 in 2010/11, the full year figures will be superb. Going by the optimistic forecasts by several airlines for 2010/2011 KQ is likely to do better in the second half of 2010/11 compared to 2009/10. The key challenge will be fuel prices: aviation prices were up 27% in 2010 compared to 2009 according to KQ’s half year report. Crude oil prices are on an upward trend as the global economy recovers: aviation fuel prices will rise in lock-step.
