African Capital Market Analysis by Kampamba Shula

African Capital Markets

This is the first edition in a collection of articles analysing the African Capital Markets.More articles of this nature with greater insight and analysis will be prepared.

Market Index	1-Month Return	1-Year Return	3-Year Return	5-Year Return	6-Year Return	Year to Date Return	Avg Weekly Trade Volume
Botswana Stock Exchange	-0.1%	-0.6%	-10.6%	-23.2%	-14.2%	0.8%	$2.6m
Bourse Régionale des Valeurs Mobilières	6.9%	27.5%	34.8%	-25.2%	N/A	14.5%	$3.7m
Dar es Salaam Stock Exchange	0.9%	12.3%	9.2%	5.0%	19.0%	-1.0%	$0.5m
Ghana Stock Exchange	33.3%	54.5%	49.0%	N/A	N/A	37.0%	$1.8m
Johannesburg Stock Exchange	-2.6%	-7.5%	25.7%	17.7%	33.8%	-9.3%	$3,342m
Lusaka Stock Exchange	8.3%	-0.3%	33.1%	-34.5%	53.4%	2.8%	$1.0m
Malawi Stock Exchange	-5.2%	N/A	N/A	N/A	N/A	-11.5%	$0.1m
Nairobi Securities Exchange	5.6%	55.0%	50.2%	19.7%	26.5%	14.5%	$26.2m
Namibian Stock Exchange	-0.6%	-0.4%	61.9%	72.7%	139.7%	-4.1%	$1.1m
Nigerian Stock Exchange	4.7%	78.6%	65.1%	-48.6%	-8.6%	17.3%	$98.1m
Stock Exchange of Mauritius	1.8%	8.7%	16.1%	-32.0%	68.1%	6.6%	$7.2m
Uganda Securities Exchange	10.1%	48.0%	39.8%	12.6%	9.4%	24.6%	$0.5m
Zimbabwe Stock Exchange	0.4%	61.6%	N/A	N/A	N/A	22.3%	$7.2m
S&P 500	1.1%	10.9%	37.1%	13.8%	8.3%	6.2%	N/A

Stock Analysis
 

Best Performing Stocks

Ghana Analysis

The best performing Stocks in Africa in US Dollar-Adjusted Returns as of February 28, 2013 have been from Ghana, Uganda and Zimbabwe.

Ghana scored a year to date growth rate of 37% with an average weekly trading volume in the range of $1.8mil. The Ghana Stock Exchange (GSE) is the principal stock exchange of Ghana. The exchange was incorporated in July 1989 with trading commencing in 1990.

 

Uganda Analysis

Uganda scored a year to date growth rate of 24.6% with an average weekly trading volume in the range of $0.5m.

Kenyan firms cross-listed on the Ugandan stock market were the main movers of the neighbouring country’s bourse in 2012, trading data up to the end of the year has showed.
The high capital gains of Kenyan firms listed on the Uganda Securities Exchange helped to lift the bourse’s valuation, according to a summary report done by the country’s Capital Markets Authority (CMA).
About seven Kenyan firms are cross-listed on the Ugandan exchange out of a total of 15 companies that are traded on the bourse.
“The rise in market capitalisation was driven by an increase in the market capitalisation of five cross-listed counters (Nation Media Group, Kenya Airways, Jubilee Holdings, East African Breweries Limited and Equity Bank Limited), Bank of Baroda Uganda as well as the listing of Umeme shares,” says the latest CMA (Uganda) Monthly report.

Between January and December 2012 the USE’s market capitalisation increased by 36 per cent to $5.81 billion from $4.26 billion, driven mainly by the strong performance of Kenyan stocks.

KCB’s share, which is also cross-listed on the USE, was not included in CMA Uganda’s report but its stock was the highest performer of all cross-listed shares in 2012, appreciating by 80 per cent in 2012.

KCB’s share price closed 2012 at Sh29.75, an 80 per cent increase from the Sh16.80 opening level for 2012.

Nation Media Group’s share price rose by 57 per cent to Sh222 from Sh140, EABL rose by 54 per cent (Sh264 from Sh175), Equity Bank 44 per cent (Sh24 from Sh16.75), Jubilee Insurance by 11.61 per cent (Sh173 from sh155).

The other Kenyan firms cross-listed on the Ugandan bourse are Centum and Kenya Airways, which saw their share prices drop over the year.

Centum’s share price went down marginally to Sh12.40 from Sh13.50, a 5.34 per cent drop.

Kenya Airways saw its share price slump in 2012 to Sh11.25 from Sh20.50, a 45 per cent drop, but its total market capitalisation has risen due to the addition of one billion shares from the rights issue.

At the beginning of 2012 and before the rights issue Kenya Airways had a Sh9.4 billion market capitalisation, but after the rights issue this rose to Sh16.69 billion despite the price drop.

 Ugandan utility provider, Umeme, is cross-listed on the Nairobi Securities Exchange (NSE).

Overall Kenyan firms account for around 85 per cent of the USE’s market valuation, which makes the capitalisation of the two exchanges move in unison.Ugandan stockbrokers and investment banks said the lack of seamless trading between Ugandan and Kenyan investors had created inefficiencies between the two bourses.

African Alliance Investment Bank (Uganda) chief executive Ken Kitariko said the lack of a seamless trading platform between the USE and the NSE has limited fund managers and retail investors from active trading in cross-listed stocks.

This is a tricky situation for Uganda because given that the market capitalization of USE of about 85% is accounted for by Kenyan shares.

Zimbabwe Analysis

Zimbabwe scored a year to date growth rate of 22.3% with an average weekly trading volume in the range of $7.2m.

The Zimbabwe Stock Exchange, or ZSE, is the official stock exchange of Zimbabwe. It has been open to foreign investment since 1993. Despite the shrinking of the economy since 2000, the stock market inversely reacted to the factors that affected the economy negatively. The ZSE was driven mainly by speculation as investors sought to hedge against hyperinflation (Kosmas Njanike, 2009).

The ZSE’s main industrials index has added 20.3% since the beginning of the year, making it one of the best performing bourses.

 Foreign investors seem to be behind the ZSE’s rally, with South Africa-based players like Allan Gray, African Alliance and Renaissance Securities broking deals for the foreigners.

Market capitalisation is a measurement of size of a business enterprise (corporation) equal to the share price times the number of shares.

 The market capitalisation opened the year at $3,93 billion.Total turnover from January 2 to February 28 this year stood at $82,7 million. At the close of February Delta Beverages was valued at $1,3 billion.

 Official figures show that counters in the consumptive sector Econet, British American Tobacco, SeedCo, Innscor Limited, Hippo Valley, OK Zimbabwe, Old Mutual, Dairibord and National Foods dominated the top 10 market capitalisation.

 A Harare-based analyst said the fact that the counters were top on the ZSE was an indication of the low disposable income by the majority of people.

 “These counters sell goods that people consume everyday while counters that sell other goods such as capital goods don’t have big market capitalisation,” he said.

The government plans to demutualise the ZSE in order to expose it to market forces in line with global trends.

 6 Year Return

The Namibian Stock exchange actually has the best 6 year return with a growth rate of 139% and average weekly trading volumes in the range of $1.1m.It is followed by Mauritius, Lusaka then Johannesburg.

Bibliography

Kosmas Njanike, P. K. (2009). Factors Influencing the Zimbabwe Stock Exchange Performance (2002-2007). Annals of the University of Petrosani, Economics, 2009, vol. 9, issue 2, pages 161-172.

 http://investinginafrica.net/african-stock-markets/african-stock-market-performance/?goback=%2Egde_2225001_member_219024402