Monthly Highlights: July 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%)
•  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
 

In the month of July, African stock markets were mostly in the green led by Zambia which closed +19.7% higher in USD, driven by the +15.4% appreciation of the ZMW, followed by Zimbabwe (+9.8%) and BRVM (+5.2%). The major losers were Uganda (-0.6%), Morocco (-0.6%) and Tanzania (-0.2%). A plethora of 1H21 results were released into month-end, in general, marking a strong up turn following a difficult prior year due to the pandemic.

In West Africa, all equity markets recorded positive performance with the BRVM leading the way, gaining +5.2% followed by Ghana and Nigeria which both closed +1.6% higher

In West Africa, all equity markets recorded positive performance with the BRVM leading the way, gaining +5.2% followed by Ghana and Nigeria which both closed +1.6% higher. In Nigeria, Unilever released excellent 1H21 results (T/O +43.2% y/y; PAT +237.6% y/y) as it implements new strategies to deliver sustainable growth. MTN Nigeria recorded strong 1H21 performance (T/0 +37.8% y/y; PAT +38.1% y/y) buoyed by double digit increase in voice, data, digital and fintech revenues. Nestlé Nigeria’s 1H21 were mixed (T/O +21.6% y/y; PAT -0.4% y/y) as topline was propelled by growth in the company’s food (+17.6% y/y) and beverage (+27.8% y/y) businesses, however due to a sharp increase in finance costs (262.2%) there was a decline in the bottom line. Okomu Palm Oil also released its 1H21 results displaying exceptionally strong growth (T/0 +74.6% y/y; PAT +138.0% y/y) supported by the rising price of palm oil, improved yields and a decline in finance costs (-74.0% y/y). In the BRVM, Sonatel reported strong 1H21 results (T/O +9.3% y/y; PAT +32.3% y/y) steered by growth in the mobile segment (+31.0%), broadband segment (+36.3%) and Orange money (+23.0%). Ecobank CI’s 1H21 performance (GE 7.0% y/y; PAT +20.0% y/y) improved due to positive operating leverage, efficiency gains and an improved credit quality.

The East African equity markets posted mixed performance with Rwanda and Kenya recording positive returns while Uganda and Tanzania were negative.

The East African equity markets posted mixed performance with Rwanda and Kenya recording positive returns while Uganda and Tanzania were negative. Kenya’s July 2021 inflation rate was 6.4% against 6.3% in June 2021. This was due to the rise in commodity prices affected by the Finance Bill 2021 which delivered several tax increases, with a knock on impact on inflation, such as increases in the tax on petroleum products and excise duty on airtime to 16% and 20% respectively. On the earnings front, EABL reported mixed FY21 results (T/0 +14.7%; PAT -0.8%) sales increased by 14.7% but PAT fell as a consequence of cost of sales which increased by +15.9% y/y, operating expenses which grew by +18.7% y/y and i the effective tax rate increased to 35.9% from 34.1%. The ILAM Fahari IREIT released poor 1H21 results (T/0 -19.0% y/y; PAT -50.9% y/y) due to the drop in rental revenue in Greenspan Mall as a result of the closure of Tuskys Supermarket, the premise is now being occupied by Naivas Supermarkets, which should bring a change in fortune. On the other hand, Eaagads reported impressive FY21 numbers (T/0 +187.2% y/y; PAT +102.6% y/y) driven by a surge in sales and fair value on biological assets. Uganda recorded an annual headline inflation rate of 2.1% in July, a rise as compared to June’s 2.0%. However, its annual core inflation dropped to 2.5% from 2.7% in June 2021. In Tanzania, CRDB Bank’s 1H21 results showed strong growth (G/E +10.6% y/y; PAT +25.9% y/y) on the back of solid loan growth (+31.7% y/y) and cost efficiencies with cost to income ratio improving to 59.3% from 63.2% in 1H20. Similarly, NMB Bank’s 1H21 results were stellar (G/E 15.4% y/y; PAT +41.4% y/y) driven by higher net interest income (+20.8% y/y) and non-funded income (+15.0% y/y).

North African equities displayed mixed performance as Egypt and Tunisia gained while Morocco lost (-0.6%)

North African equities displayed mixed performance as Egypt and Tunisia gained while Morocco lost (-0.6%). In Egypt, the Central Bank of Egypt launched EGP 100bn mortgage programme for low- and middle-income home owners to allow them to access mortgages at a subsidized rate of 3% and a repayment period of 30 years. In terms of earnings, Cairo Investment and Real Estate Development (CIRA) released its 3Q21 results showing great performance (T/O +57.2% y/y; PAT +97.4% y/y) due to an increase in student numbers (+27% y/y) and average tuition paid. Performance was also supported favorable mix, supported by the impressive higher-education margins. The Commercial International Bank reported sturdy 1H21 results (G/E +0.6% y/y; PAT +21.8% y/y) boosted by a decline in impairment charges (-54.9% y/y) and improved cost efficiencies. In Morocco, the government agreed to sell 35% stake in Marsa Maroc to Groupe Tanger Med for MAD 5.48bn as part of a royal guideline to reform the public sector and support various strategic sectors. On the earnings front, Maroc Telecom’s 1H21 results were poor (T/O -7.1% y/y; PAT -5.8% y/y) negatively impacted by a significant fall in mobile voice revenues (-11.7% y/y) as a result of tougher competition and a decline in the mobile call termination rate.

Lastly, in Southern Africa we witnessed broad based gains across the region led by Zambia.

Lastly, in Southern Africa we witnessed broad based gains across the region led by Zambia. In Zambia, the July 2021 inflation rate remained at 24.6% however, the monthly inflation rate fell from 1.3% to 0.3% due to general easing of prices for food and non-food items. Zimbabwe’s inflation rate dropped to double digit level, the first time in 2 years to 56.4% from 106.6% in June 2021. The country’s annual inflation had picked at 837% in July 2020. The plunge was as a result of the stabilization of the exchange rate through introduction of foreign currency auction system in August 2020.