Monthly Highlights: September 2021

•  In West Africa, all equity markets recorded positive performance with Ghana leading the way, gaining +3.9%, followed by BRVM (+2.3%) and Nigeria (+1.7%).
•  The East African equity markets were mostly in the red except Mauritius (+3.0%) which closed positive
•  North African equities performance was disappointing, with only Morocco in the green (+2.3%) while Egypt (-5.75%) fell the most, with Tunisia (-2.4%) closely behind
•  Southern African markets were mixed with Namibia (-5.0%) and Zambia (-0.6%) the only in the red as the other markets recorded gains led by Zimbabwe (+26.8%), Malawi (+7.2%) and Botswana (+0.3%)
 

In September, African stock markets recorded mixed performance with eight markets posting positive performance and eight in the red led by Zimbabwe’s Industrials which gained (+26.8%), Malawi (+7.2%), Ghana (+3.9%), Mauritius (+3.0%) and Morocco (+2.3%), whilst the biggest laggard was Egypt (-5.8%) as a result of talks of the reapplication of the Capital Gains Tax (CGT) by Egyptian Financial Advisory Authority (EFSA), this negatively affected investor sentiment and led to a major selloff, it was followed by Namibia (-5.0%), Tunisia (-2.4%), Rwanda (-0.9%) and Tanzania (-0.7%).

In West Africa, all equity markets recorded positive performance with Ghana leading the way, gaining +3.9%, followed by BRVM (+2.3%) and Nigeria (+1.7%).

In West Africa, all equity markets recorded positive performance with Ghana leading the way, gaining +3.9%, followed by BRVM (+2.3%) and Nigeria (+1.7%). In Nigeria, Guaranty Trust Holding Company released weak 1H21 results (G/E -7.7% y/y; PAT -15.8% y/y) driven by lower net interest income (-16.1% y/y) due to a significant drop in interest income from investment securities (-47.6% y/y). United Bank of Africa reported a strong set of 1H21 results (G/E +1.4% y/y; PAT +36.3% y/y) as net interest income grew by +24.1% y/y and impairment charges were -47.0% y/y lower. Access Bank released positive 1H21 results (G/E +13.0% y/y; PAT +42.4% y/y) driven by strong growth in net interest income (+58.5% y/y), net fees and commissions (+44.7% y/y) and a 703bp reduction in the effective tax rate. In Ghana, Tullow Oil Plc reported an improvement in 1H21 (T/O -0.5% y/y; PAT USD 93m) moving from a loss to profit driven by the decline in cost of sales (-28.4% y/y), admin expenses (-55.1% y/y) and the -94.8% y/y reduction in the write-off of exploration costs.

The East African equity markets were mostly in the red except Mauritius (+3.0%) which closed positive

The East African equity markets were mostly in the red except Mauritius (+3.0%) which closed positive. Kenya reported an inflation rate of 6.91% in September 2021 from 6.57% in August 2021, driven by the rise in food prices, non-alcoholic beverages, housing, water, electricity, gas and fuel prices. This is the highest rate since February 2020 when inflation hit 7.17%. The CBK’s Monetary Policy Committee left the benchmark lending rate at 7%. The CBK expects strong GDP recovery this year supported by robust performance from the construction, manufacturing, education, real estate and transport sectors. On the earnings front, Longhorn Publishers Ltd reported improved FY21 results (T/O +16.5% y/y; PAT KES 7.2m) shifting from a loss in FY20 to profit driven by a -53.0% y/y decline in operating expenses. In other company news, Nation Media Group concluded its share buyback program which started on 28 June 2021, it bought back 17,101,352 shares which represent 8.25% of total shares, bringing the number of shares available for trading to 190,295,163. In Tanzania, Tanzania Breweries Ltd reported strong 1H21 results (T/O +5.1% y/y; PAT +23.3% y/y) with the strong bottom-line performance driven by prior year deferred tax adjustments that led to a -50.5% y/y decline in tax charge to TZS 13m. In Mauritius, IBL released impressive FY21 results (T/O -1.9% y/y; PAT MUR 75m) displaying growth from a loss after tax of MUR 1bn in FY20 to a profit due to a decline in impairment of goodwill and investments (-92.8% y/y) coupled by lower finance costs (-4.2% y/y). MCB Group released mixed FY21 results (G/E -9.1% y/y; PAT +3.1% y/y) as lower interest income (-11.8% y/y) was offset by a huge decline in interest expense (-53.2% y/y) as well as decreased impairment charges (-6.1% y/y).

North African equities performance was disappointing, with only Morocco in the green (+2.3%) while Egypt (-5.75%) fell the most, with Tunisia (-2.4%) closely behind

North African equities performance was disappointing, with only Morocco in the green (+2.3%) while Egypt (-5.75%) fell the most, with Tunisia (-2.4%) closely behind. In Morocco, Mutandis released weak 1H21 numbers (T/O +1.0% y/y; PAT -16.0% y/y) dragged down by the decline in revenues from the detergents segment (-12.6% y/y) and seafood business (-11.1% y/y) and increase in cost of sales (+5.8% y/y). In Egypt, the government issued USD 3bn Eurobonds with the sale including USD1.125bn of six-year notes at a yield of 5.8%, USD1.125bn in 12-year notes at a yield of 7.3%, and USD750m in 30-year bonds at 8.75%. The issuance was three times oversubscribed, with total bids. E-finance for Digital and Financial Investments, Egypt’s first fintech platform, announced that it will offer up 14.5% of its capital in an IPO and will list its shares on the Egyptian Exchange. The company plans to float 177.8m new shares and 240m shares owned by current shareholders on EGX. Its current shareholders are National Investment Bank (63.64%), National Bank of Egypt (9.09%) and Banque Misr (9.09%). Orascom Construction signed a contract with the National Authority of Tunnels (NAT), through a consortium with Siemens Mobility and Arab Contractors, to design, install, commission and maintain Egypt’s high-speed rail system for 15 years. The contract is valued at approximately USD4.5bn covers a 660km high-speed, electrified main and freight rail line that will connect Ain Sokhna to Alexandria and Marsa Matrouh. NAT and the consortium are also set to discuss and finalise agreements on two other high speed railway lines that will increase the total distance to 1,800km. In Tunisia, the President Kais Saied named Najla Bouden Ramadhane as the first female prime minister of Tunisia. This comes after the previous prime minister was sacked and parliament suspended. Furthermore, she is also the first woman in the Arab world to hold such a senior position. She is a professor at National Engineering School in Tunis and held the position as Director General in charge of quality at the Ministry of Higher Education and Scientific Research.

Southern African markets were mixed with Namibia (-5.0%) and Zambia (-0.6%) the only in the red as the other markets recorded gains led by Zimbabwe (+26.8%), Malawi (+7.2%) and Botswana (+0.3%)

Lastly, Southern African markets were mixed with Namibia (-5.0%) and Zambia (-0.6%) the only in the red as the other markets recorded gains led by Zimbabwe (+26.8%), Malawi (+7.2%) and Botswana (+0.3%). In Zambia, the inflation rate dropped to 22.1% in September from 24.4% in August 2021, an eight-month low as food-price growth slowed to 29.6% from 31.6% in August, while non-food inflation declined from 16.3% to 13.6% in September. In Botswana, Letshego released strong 1H21 numbers (G/E +13.4% y/y; PAT +28.0% y/y) driven by higher net interest income (+11.9% y/y) and stronger non-funded income (+32.5% y/y). Sefalana recorded growth in its FY21 results (T/O +7.8% y/y; PAT +9.6% y/y) boosted by revenue from the trading and manufacturing segment which grew by +7.8% y/y to BWP 6m and a -10.5% y/y decline in finance costs to BWP 23m. Letlole La Rona reported mixed 1H21 numbers (T/O +27.0% y/y; PAT -12.1% y/y) as strong topline growth was offset an increase in property expenses (+49.4% y/y), administration expenses (+8.6% y/y) and reduction in fair value adjustments (-76.8% y/y). Minenergy reported disappointing FY21 results (T/O +139.2% y/y; Loss BWP 106m) as cost of sales spiked by +70.5% y/y to BWP 256m and finance costs rose by +189.4% y/y to BWP 17m. Sechaba Breweries Ltd released its 1H21 results showing strong growth (T/O +106.6% y/y; PAT +111.8% y/y) driven by a +28% increase in volumes at Kgalagadi Breweries Ltd (KBL) and a +31% increase in volumes at Coca Cola Beverages Botswana (CCBB). KBL recorded PAT of BWP 199m (+144.2% y/y) while CCBB recorded BWP 47m (+48.6% y/y) in 1H21. Zimbabwe’s September 2021 inflation rate rose to 51.55% from 50.24% in August 2021. On a month-on-month basis inflation rose by 4.73% due to increases in the food and beverages index which increased by 1.68%. On the corporate front, Simbisa Brands reported FY21 results (T/O +107.8% y/y; PAT +96.8% y/y in RTGS dollars) supported an increase of +34.0% y/y in average spend and an +8.0% y/y increase in customer counts. Rainbow Tourism Group (RTG) displayed growth in its 1H21 numbers (T/O +52.7% y/y; PAT +48.3% y/y in RTGS dollars) supported by an increase in revenue from rooms (+35.1% y/y) and food and beverages (+70.8% y/y) combined with cost reduction measures that led to a decline in administration expenses by -14.3% y/y.