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

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Market Review for 2010 Spurred by a solid performance across the board, the ALSI gained 62.19% to end the year at 1,188.07 points. However, a materially weakening currency versus the dollar, particularly towards the end of the year and which has continued into 2011 as the election approaches meant the USD return was a relatively lower 33.81%. The currency weakness has been attributed to high dollar demand from the energy sector, tight supply, speculative trading by offshore players and elevated state expenditure. Of the twelve counters that were listed at the beginning of the year, nine closed in the black while three ended in the red. BATU was the top performer, up 431.69% in USD terms, as it saw a re-rating after it more than doubled its 2009 earnings. Market capitalisation increased by 78.98%% over the course of the year to close at USD 5.6bn. EABL was the most capitalised counter with 35.81% of the total. SBU was the most highly capitalised local listing, with 10.74%. Total volumes for the year were up 82.39% to 224.8m shares while value traded increased by 75.38% to USD 18.4m, both metrics boosted by the listing of NIC in March. SBU remained the most active stock by volumes and value, with 39.83% and 52.02% contributions respectively. The liquidity ratio remained very low, with some of the cross listings still only seeing all of their trades occurring in Nairobi. Nevertheless a slight improvement was recorded to 0.33% from the 0.28% achieved in 2009. Market Outlook for 2011 The market will be watching the presidential election with interest, given that the challenger has already threatened an “Egypt style” response should the opposition feel the election was rigged. Political risk will thus be somewhat higher until the electoral process is complete. With cross listings dominating the market, however, events in Kenya are more likely to have an impact on the direction of the exchange, we believe. 10 Most Active Stocks by Volume Company Vol. (m) % of Total Stanbic Bank Uganda 89.52 39.83 NIC 86.74 38.59 Uganda Clays 31.50 14.02 Bank of Baroda 8.70 3.87 DFCU Ltd 6.02 2.68 East African Breweries 1.12 0.50 New Vision 0.57 0.25 British American Tobacco 0.49 0.22 Equity Bank 0.10 0.05 NMG 0.00 0.00 10 Most Active Stocks by Value Company Val. (USD) % of Total Stanbic Bank Uganda 9 575 684 52.02 NIC 2 393 556 13.00 East African Breweries 2 035 835 11.06 DFCU Ltd 1 816 388 9.87 Bank of Baroda 1 457 957 7.92 Uganda Clays 737 162 4.00 British American Tobacco 191 386 1.04 New Vision 177 370 0.96 Equity Bank 18 929 0.10 NMG 3 563 0.02 Source: USE/Renaissance Uganda/IAS Top Picks for 2011 DFCU – Growing branch network and deposits; strong interim performance should filter through to FY; introducing new products to boost fee income Economic growth for 2010 is estimated at 6.3% and forecast to grow to 6.5% in 2011 and then 8.6% in 2012 as oil revenues begin to flow. The positive growth prospects should thus also give the market upward momentum, though the weak currency and potential impact on inflation remains a concern in the short to medium term. Liquidity remains a problem and to this end the USE will this year move to trading every day of the week from the current three, while at least three new listings are expected this year, including Tullow Oil and Umeme. Centum from Kenya has already cross listed earlier this year. The USE is also working on developing a local index to capture the trading activity of domestic companies. 23
EQUITY RESEARCH ZAMBIA FEBRUARY 2011 2010 REVIEW AND 2011 OUTLOOK The resilience shown by the Zambian Economy to the global economic crisis saw the economy post an estimated real GDP growth rate of 7.1% in 2010, marking twelve consecutive years of positive GDP growth averaging 5.12% per annum over the period. Recovery in global trade saw strong demand for commodities from India, China and Brazil. For Zambia, the key sectors expected to have driven GDP were agriculture and mining, while higher growth was also expected in the construction, transport and communication and tourism sectors. Preliminary estimates show these sectors posting growth rates of +12.9%, +16.8%, +7.2%, +14.9% and +25%, respectively. The notable attributes to growth in the named sectors were: • Bumper maize production in the agricultural sector at 2.8m metric tonnes (2009: 1.9 MT) as well as increased production from NTE’s (nontraditional exports), mainly tobacco, sugar and cotton. • The total trade surplus in year to October 2010 was ZMK 6.2tn, up +196.7% from 2009, while total exports derived from NTE’s grew +7.6% to ZMK 5.2tn. According to the 2011 national budget, NTE’s are expected to grow by +8.2% in 2010 to USD 973.7m. Top 5 Gainers and Losers - 2010 Opening Closing % Change % Change Company Price Price (LC) (USD) LuSE ALSI 2 794.89 3 322.47 18.88 15.03 Metal Fabricators of Zambia Plc 200 600 200.00 190.29 AEL Zambia Plc 1 000 1 810 81.00 75.14 Zambia National Commercial Bank Plc 550 821 49.27 44.44 Shoprite Holdings Ltd 21 800 32 000 46.79 42.04 Copperbelt Energy Corporation Plc 430 615 43.02 38.39 Zambeef Products Plc 3 800 3 700 -2.63 -5.78 Zambia Bata Shoe Company Plc 90 80 -11.11 -13.94 Zambia Sugar Plc 381 310 -18.64 -21.27 Cavmont Capital Holdings Plc 9 4 -52.94 -54.46 ZCCM Investment Holdings Plc 27 000 10 000 -62.96 -64.16 Source: LuSE Top Ten Shares by Market Cap. Company (ZMK m) (USD m) % of Total Shoprite Holdings Ltd 17 391 343.00 3 618.59 56.26 Zain Zambia Plc 3 692 000.00 768.19 11.94 Zambia Sugar Plc 1 962 742.59 408.38 6.35 Lafarge Cement Zambia Plc 1 363 271.95 283.65 4.41 Standard Chartered Bank (Zambia) Plc 1 138 410.00 236.87 3.68 Zambia National Commercial Bank Plc 948 255.01 197.30 3.07 Zambian Breweries Plc 910 000.00 189.34 2.94 ZCCM Investment Holdings Plc 892 964.28 185.80 2.89 Copperbelt Energy Corporation Plc 615 000.00 127.96 1.99 Zambeef Products Plc 587 212.37 122.18 1.90 Source: LuSE • The 2010 soccer world cup in South Africa coupled with recovery in the global economy supported tourism sector growth; • Strong demand for residential and commercial properties and increased public expenditure on the road sector led to growth in the construction sector. This sector is expected to grow further on the back of various power-generation related construction works. • Reduction in call tariffs and the introduction of 3 rd generation mobile services had driven growth in the communication sector; • Increased copper production exceeding 720,000 metric tonnes was on the back of buoyancy in global copper prices that averaged USD 7,567.29 per metric tonne in 2010. Total metal exports grew +38% to ZMK 22.4tn at October 2010 in comparison with 2009. Projected 2011 GDP growth rate is at 6.4% with key sectors such as manufacturing, transport and communication earmarked for a recovery; while continued growth is expected in construction, mining and tourism sectors. Index 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 0.95 0.90 LuSE relative to S&P African Frontier S&P African Frontier LuSE Index 24
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Sub-Saharan Africa Stock Markets 2010 Review & 2011 ... - Imara

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