Africa investor Ai40 Weekly Commentary - 27 February 2017
Monday, 27 Feb 2017
Following decent gains last week, the Ai40 Investor’s Index lost some ground as it edged down marginally this past session. Beer and banking stocks from Nigeria and Kenya respectively enjoyed the best gains over the week; while South Africa’s three "Anglos" all featured in the Biggest Losers list. The index fell by 65 basis points; a drop of 0.69% from last week’s value of 93.98. The index closed Friday at a value of 93.33.
In global markets, stock performance was mixed as investors took a more cautionary approach and scaled back expectations that the POTUS’ policies would boost faster economic growth; investors poured into safe havens in the form of bonds and gold assets. In Europe, fourth-quarter growth came in lower than analyst predictions and in China, a recent reshuffle of the economic management team raised concern amongst traders according to Investopedia. In the US, equities closed marginally higher as investors wait for President Trump’s first speech to congress this week. According to FactSet, "66% of S&P 500 companies...beat mean earnings per share estimates during the fourth quarter of 2016 with a...4.6% growth rate."
At Friday’s close, the Dow Jones Industrial Average was up 0.05%, or 11.44 points, to close at a value of 20,821.76. The Nasdaq Composite Index gained 0.17%, or 9.80 points, to end the session at 5,845.31. The S&P 500 was also up 0.15%, or 3.53 points, to close Friday on a value of 2,367.34. Japan’s Nikkei 225 gained 0.25%; Germany’s DAX 30 rose 0.23%; and, Britain’s FTSE 100 dropped 0.86%.
Nigerian and Kenyan equities took up two spots each on the Top Gainers list. Shares for Nigerian Breweries gained 12.7% marking the company’s best performance on the index in a long stretch. Nigeria’s second largest quoted company released its audited report last week and group revenue rose to 313.74 billion naira from 293.91 billion the previous year. Another beer stock, Guinness Nigeria, enjoyed significant gains over the last session as the shares rose 11.2%. Egyptian real estate firm TMG Holding was also in positive territory and was up 6.4%.
In Kenya, stocks for Barclays Bank and Kenya Commercial Bank increased by 5.5% and 5.2% respectively. Last week, Barclays Bank Kenya announced that a rise in non-performing loans and a government cap on lending rates cut its 2016 pre-tax profit by 10%, according to Reuters.
Last session, the three Anglos were the main feature on the Losers List. Stock for AngloGold Ashanti fared the worst with an 11.4% drop. The miner reported earnings for H2 2016 last week; despite declaring its first dividend since 2013 and posting a profit of $80m for the year (in comparison to a $70m loss the year before); the stock still suffered. According to Barron’s, a "culprit for the performance divergence could be the CEO’s share sale." Shares for Anglo American took a 6.8% knock last session, however, the company has managed to reap rewards from the recent rise in commodity prices and announced that 2016 EBITDA was up 25% to $6.1 billion. Anglo Platinum suffered less than its peers with a 3.7% drop.
Moroccan-listed Banque Centrale Populaire and Lagos-listed First Bank were down 6.5% and 6.0% respectively.