Sub-Saharan Africa Stock Markets 2010 Review & 2011 ... - Imara

EQUITY RESEARCH
UGANDA
FEBRUARY 2011
2010 REVIEW AND 2011 OUTLOOK
While politics and oil, (or the politics of oil, perhaps?),
were the major themes playing on the minds of
Ugandan’s during 2010, this did not deter from the
local bourse’ performance as it closed the year as the
top performer in SSA.
On the political scene, campaigning for the upcoming
presidential election, which is set for Friday the 18 th of
February, was the name of the game. The odds seem to
be stacked in favour of incumbent President Yoweri
Museveni, who most are expecting to win and add another
term thereby extending his rule to 30 years, despite a
fierce challenge from third-time rival and former ally
Kizza Besigye. Besigye, the president's doctor in the bush
when he was a rebel leader, now heads the four-party
Inter-Party Cooperation coalition that has made deep
inroads in rural areas that are the veteran president's
traditional support base. He says he was cheated of
victory in the last two elections and cites rulings by the
Supreme Court, which said the 2001 and 2006 elections
were marred by vote-rigging but that this did not affect
the overall result.
Both candidates are striving to be the ones to take
Uganda forward in what will potentially be a golden age
for the country following the discovery of oil. Uganda is
expected to reap the benefits of the significant oil find in
the Lake Albert basin, west of the country. Following on
from Shell’s abandoned exploration activities in that
region 30 years ago due to falling oil prices and political
tension, Tullow Oil (and former partner for the two blocks
at Lake Albert, Heritage Oil Plc), returned to the basin
and found large crude deposits, with a confirmed 800m
barrels already discovered, out of an estimated 2.5bn
barrels in reserves. Only four other SSA countries, Nigeria,
Angola, Gabon and Sudan have proven reserves of over
2bn barrels.
Top 5 Gainers and Losers - 2010 Opening Closing % Change % Change
Company Price Price (LC) (USD)
ALSI 732.53 1 188.07 62.19 33.81
British American Tobacco 270 1 740 544.44 431.69
Equity Bank 355 762 114.65 77.09
Jubilee Holdings 2 904 5 294 82.30 50.40
East African Breweries 3 636 5 783 59.05 31.22
Stanbic Bank Uganda 170 268 57.65 30.06
Kenya Commercial Bank 518 619 19.50 -1.41
NIC Bank 60 70 16.67 -3.75
Uganda Clays 50 50 - -17.50 S
ource: USE/IAS
Top Ten Shares by Market Cap.
Company (UGX bn) (USD m) % of Total
East African Breweries 4 573.05 2 006.22 35.81
Equity Bank 2 821.52 1 237.81 22.10
Kenya Commercial Bank 1 826.15 801.14 14.30
Stanbic Bank Uganda 1 371.86 601.84 10.74
NMG 718.66 315.28 5.63
Kenya Airways 610.72 267.93 4.78
Jubilee Holdings 238.23 104.51 1.87
DFCU Ltd 204.35 89.65 1.60
Bank of Baroda 201.60 88.44 1.58
British American Tobacco 85.40 37.47 0.67
Source: USE/IAS
USE-ALSI relative to S&P African Frontier
Index
1.80
1.70
1.60
The potential impact on Uganda’s economy of the
discovery, (commercial production now expected to begin
early 2012 having been pushed back), will be massive.
The IMF is of the view that it is too soon to estimate
precisely the impact of oil on the economy, as the timing,
scope and pace of oil production will be a function of
ongoing exploration and technical analyses. However, it
does say oil revenues are likely to exceed one third of
total government revenues and contribute up to 8% of
GDP, and thus can be expected to alter meaningfully
Uganda’s productive, fiscal and financial landscape.
1.50
1.40
1.30
1.20
1.10
1.00
0.90
Source: IAS
S&P African Frontier
USE-ALSI
22