companies & markets

Africa investor Ai40 Weekly Commentary - 31 July 2017

Monday, 31 July 2017

The Ai40 Investor’s Index continued on a tear last week as it broke the 100 level. In a shift of fortunes, Nigerian stocks which had underperformed in the previous weeks shined as the top picks. Lagos-listed equities buoyed the Index as it gained an impressive 2.85 points (or 2.9%) from a previous close of 97.73 to end Friday at a high of 100.58.

In the US, equities markets were mixed on Friday as shares for Amazon took a huge knock due to poor second quarter earnings. According to Market Watch, "the e-commerce giant reported a profit decline of 77% from the same quarter a year ago." The Nasdaq and the S&P 500 both closed lower for the week, while the Dow Jones managed to shake off Amazon’s decline and end the week in green. On the global front, equity markets dropped as earnings from large US firms disappointed and key tobacco stocks were also on the decline. Oil prices, however, "added to recent gains and were on track for their biggest weekly percentage rise this year" according to Reuters. Prices climbed $3.94 last week to close at $49.71 on Friday, the highest settlement since May 26.

At Friday’s close, the Dow Jones Industrial Average was up 0.15%, or 33.76 points, to close the week at a value of 21,830.31. The Nasdaq Composite Index dropped 0.12 points, to end the week at a value of 6,374.68. The S&P 500 closed the week lower by 0.13% or 3.32 points, to close Friday on a value of 2,472.10.

Gainers
After dominating the Losers List for three weeks, Nigerian equities tracked by the Index found some respite as all five of the spots on the Gainers list were taken by Lagos-listed companies. Banking stocks performed particularly well as Stanbic IBTC Bank was last week’s top stock with a gain of 23.2%. Zenith Bank and Guaranty Trust Bank also fared just as well with increases of 20.3% and 16.9% respectively.

Non-banking stocks that were in favour with investors last week were Dangote Cement which enjoyed an 18.5% gain while Nigerian Breweries rose by 15.1%. According to Bloomberg, "Traders are betting the economy will soon emerge from a recession and a foreign-exchange shortage will end thanks to a new currency-trading window for investors."

Losers
Orange Egypt was last week’s worst performer, the stock fell by a hefty 15.2%. The stock experienced heavy selling by traders following reports of poor earnings for the second quarter of 2017. According to Menafn.com, "the losses of the company during the first half of this year increased by 32.5% to reach EGP 1.1bn at the end of June, compared to net losses of EGP 33.4m in the same period of 2016." Still in Egypt, stock for Commercial International Bank fell 2% last week.

Shares for MTN Group were also in red as the company’s earnings failed to meet analyst’s expectations. After putting the Nigerian fine saga behind it, investors were expecting a stronger rebound in earnings per share. The stock was down 3.9%.

Banque de Tunisie and Banque Marocaine du Commerce dropped by 1% and 0.6% respectively.

Credits: David Ruwodo/Africa investor