Monthly Highlights: August 2021

•  In West Africa, all equity markets except Ghana recorded positive performance with the BRVM leading the way, gaining +4.4%, followed by Nigeria which closed +1.7% higher
•  The East African equity markets posted mixed performance with Uganda (+0.5%), Mauritius (+1.2%) and Kenya (+1.2%) recording positive returns, while Rwanda (-0.7%) and Tanzania (-0.5%) were negative
•  North African equities displayed impressive performance, with every market in the green, Egypt (+3.7%), Morocco (+3.0%). and Tunisia (+0.6%)
•  Lastly, in Southern Africa we witnessed broad based gains across the region led by Zambia (+21.1%),
 

In the month of August, African stock markets were mostly in the green led by Zambia, which posted a +21.1% return in USD, driven by the +16.7% appreciation of the ZMW against the USD in August on the back of the Zambian elections which saw President Edgar Lungu defeated and peacefully hand power to the opposition leader, Hakainde Hichilema, mid-month. Other gainers were Malawi (+7.2%) and BRVM (+4.4%). The major losers were Zimbabwe (-2.7%), Rwanda (-0.7%) and Ghana (-0.7%).

In West Africa, all equity markets except Ghana recorded positive performance with the BRVM leading the way, gaining +4.4%, followed by Nigeria which closed +1.7% higher

In West Africa, all equity markets except Ghana recorded positive performance with the BRVM leading the way, gaining +4.4%, followed by Nigeria which closed +1.7% higher. In Nigeria, the Central Bank of Nigeria stated that the country’s annual inflation rate may drop to 13% this year and fall further to single digits by 2022. Zenith Bank Plc released benign 1H21 results (G/E -0.2% y/y; PAT +2.2% y/y) driven by relatively flat topline growth alongside a +10.3% y/y growth in operating expenses offsetting a -17.2% y/y decline in impairment charges. Guinness Nigeria recorded stronger FY21 performance (T/0 +53.7% y/y; PAT NGN 1bn) evidenced by the shift from a loss of NGN 13bn in FY20 to a profit of NGN 1bn in FY21 driven by impressive topline growth. It was driven by its core product, Guinness (+50% y/y), Malta Guinness (+50% y/y) and mainstream spirits (+75% y/y). In Ghana, Fan Milk (FML) reported strong FY21 results (T/O +29.4% y/y; PAT +882.2% y/y) steered by recovery in outdoor business and an increase in exports to Francophone countries.

The East African equity markets posted mixed performance with Uganda (+0.5%), Mauritius (+1.2%) and Kenya (+1.2%) recording positive returns, while Rwanda (-0.7%) and Tanzania (-0.5%) were negative

The East African equity markets posted mixed performance with Uganda (+0.5%), Mauritius (+1.2%) and Kenya (+1.2%) recording positive returns, while Rwanda (-0.7%) and Tanzania (-0.5%) were negative. Kenya’s August 2021 inflation rate was 6.57% from 6.55% in July 2021. This was due to the rise in food prices, non- alcoholic beverages (+10.67%) and transport (+7.93%) which outweighed the decrease in prices of potatoes (-0.48%), onions (-0.3%), sugar (-0.2%) and electricity (-0.03%). On the earnings front, KCB Group reported improved 1H21 results (G/E +11.2% y/y; PAT +101.9% y/y) as EPS grew by +60.0% y/y to KES 8.53, driven by net interest income growth (+17.2%y/y), as well as, a -40.30% y/y decrease in loan loss provisions. KCB also announced that it has completed the acquisition of Banque Populaire Du Rwanda PLC (BPR), a commercial bank established and operating in Rwanda. Equity Group released very impressive results (G/E +35.6% y/y; PAT +97.7% y/y) as net interest income grew 26.5%% y/y, this was augmented by a significant reduction in impairment charges which were -63.7% lower y/y at KES 2.9bn. Co-operative Bank released mixed 1H21 results (G/E +20.5% y/y; PAT +2.3% y/y) as strong topline performance was offset by rising impairment charges (+123% y/y). Total Energies reported great 1H21 performance (T/O +16.6% y/y; PAT +49.8% y/y) supported by increase in nets sales (+9.6% y/y), a significant drop in foreign exchange losses (-96.5% y/y) and lower operating expenses(-0.31% y/y). Standard Chartered Kenya reported improved 1H21 results (G/E -1.9% y/y; PAT +19.2% y/y), driven by non-interest income growth (+13.5% y/y), as well as, a -60.7% y/y decrease in loan loss provisions. In Uganda, Umeme’s 1H21 results showed strong growth (T/O +9.3% y/y; PAT +121.6% y/y) on the back of higher electricity demand by all consumer categories and lower finance cost (-15.4% y/y) arising from lower interest rates on its long-term facilities and a reduction in net debt (-18.4% y/y). In Rwanda, Bank of Kigali Group reported strong 1H21 results (G/E +27.9% y/y; PAT +41.5% y/y) as from impressive growth in both net interest income (+29.9% y/y) and non-interest income (+26.4% y/y). I&M Bank Rwanda also recorded growth in its 1H21 results (G/E +16.3% y/y; PAT +55.4% y/y) driven by increase in interest income (+19.29% y/y) and decrease in impairment charges by -15.2% y/y. In Mauritius, SBM Holdings displayed a remarkable 1H21 performance (G/E +9.7% y/y; PAT +84.9% y/y) due to growth in net interest income (+1.96% y/y), non-interest income (+2.36% y/y) and decrease in credit loss expenses (-35.9% y/y).

North African equities displayed impressive performance, with every market in the green, Egypt (+3.7%), Morocco (+3.0%). and Tunisia (+0.6%)

North African equities displayed impressive performance, with every market in the green, Egypt (+3.7%), Morocco (+3.0%). and Tunisia (+0.6%). In Egypt, Cleopatra Hospitals Group released its 1H21 results showing an upturn in performance (T/O +51.4% y/y; PAT +98.0% y/y) from higher patient traffic across all segments and higher utilization rates. Ibnsina Pharma reported growth in its 1H21 results (T/O +14.1% y/y; PAT +19.9% y/y) supported by higher revenue across each of the company’s different segments: retail pharmacy (+10.0% y/y), wholesale (+35.2% y/y) and private hospitals (+14.2% y/y), with operating costs well managed, growing only +4.7% y/y to EGP408.2m. Fawry’s released weaker 2Q21 results (T/O +35.1% y/y; PAT -6.0% y/y) due to surge in SG&A costs (+55.0% y/y) as a result of increase in general expenses (+69.6% y/y), marketing costs (+36.6% y/y) and interest costs which increased by +132.1% y/y.

Lastly, in Southern Africa we witnessed broad based gains across the region led by Zambia (+21.1%)

Lastly, in Southern Africa we witnessed broad based gains across the region led by Zambia (+21.1%), Malawi (+7.2%) and Namibia (+0.5%) while Botswana closed fractionally lower (-0.1%) and Zimbabwe fell -2.7%. In Zambia, the August 2021 inflation rate dropped to 24.4% from 24.6% in July 2021 reflecting the easing of inflation for non-food items mainly motor vehicles. Zambia Reinsurrance’s 1H21 performance on the other hand dwindled (G/E +87.1% y/y; PAT -65.3% y/y) due to a spike in retrocession costs (-362.4% y/y) and decrease in operating income which fell by -45.1% y/y. Zambian Breweries recorded excellent 1H21 results (T/O +46.4% y/y; PAT ZMW 90m) on the back of improved performance from the high profit margin, beer segment, as a result of a perfectly executed sales mix and reduction in foreign exchange loss by -75.9% y/y. Zimbabwe’s inflation rate dropped to 50.24% from 56.37% in July 2021. The country’s fiscal and monetary authorities are optimistic about the outlook and are targeting an inflation rate of 25% by year end.