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

Market Review for 2010
Both major indices saw a relatively strong performance in
2010, certainly in local currency terms, with the BRVM
Composite up 20.48% while the BRVM 10 gained 27.41%. In
USD terms, the BRVM Composite and BRVM 10 were
11.96% and 18.39% higher respectively, as the currency
weakened over the course of the year.
Fourteen counters closed the year in the black, against 25
in the red, with the best performing sector being the
agricultural stocks, led by SAPH (+152.34%) and Palm
(+96.97%), which both saw significant appreciation as
investors expect them to benefit for rising rubber and
palm oil prices respectively. Juggernaut Sonatel also had
a strong year, closing 28.33% higher. The agriculture
sector gained 103.24%, followed by the public services (of
which Sonatel is a constituent) up 22.82% and the
financials up 20.49%.
Market capitalisation increased by 23.63% over the course
of the year to close at USD 7.2bn. Sonatel remained the
most capitalised counter on the exchange with 44.37%,
followed by ETI with 13.42% and Solibra with 4.74%.
Total volumes for the year were flat, up just 1.01% to
28.3m shares, while value traded fared marginally better,
up 3.70% to XOF 65.4bn, or circa USD 135.2m. ETI was by
far the most active stock by volumes, contributing 94.68%
of the total. Value traded was led by the market cap
leader, Sonatel, which had 56.28% l, well ahead of SAPH
at number two with 11.13%. The liquidity ratio remained
low, deteriorating to 1.89% from 2.25% in 2009.
Market Outlook for 2011
The political crisis in Cote d’Ivoire has continued into
2011, and despite numerous attempts at mediation by the
African Union and other organisations, Gbagbo is digging
in his heels, with a Kenya/Zimbabwe style “solution” of a
government of national unity perhaps occupying his mind.
While initially we thought the exchange would continue
relatively unscathed as it has been by the political
fallout, security concerns have seen the BRVM closing its
doors in Cote d’Ivoire, at least until 28 February. We
assume there are contingencies for it to relocate to one
of the other member states where necessary, but this
scenario is likely to spook investors in the short term.
Whilst we expect a positive outturn for both indices, we
think the year end return may fall short of that witnessed
in 2010, with the agricultural sector having already rerated
significantly, although rising prices for the
commodities it produces should see more upside. The
financial and telecoms sectors will also be key
determinants of market direction this year, with the
Ivorian focused banks in particular likely to see some
fallout from the electoral crisis.
10 Most Active Stocks by Volume
Company
Vol. (m) % of Total
Ecobank Transnational Inc. 26.78 94.68
SAPH CI 0.38 1.34
Palm CI 0.29 1.03
Sonatel CI 0.27 0.95
CIE CI 0.09 0.31
SOGB CI 0.08 0.29
Bank of Africa BN 0.05 0.18
Filtisac CI 0.05 0.18
Bank of Africa CI 0.04 0.13
Onatel BF 0.03 0.12
10 Most Active Stocks by Value
Company
Val. (USD) % of Total
Sonatel CI 76 070 014 56.28
SAPH CI 15 050 859 11.13
Bank of Africa BN 5 029 608 3.72
Total CI 5 017 785 3.71
Palm CI 4 764 965 3.53
SOGB CI 3 480 350 2.57
Onatel BF 3 168 255 2.34
CIE CI 2 653 713 1.96
Ecobank Transnational Inc. 2 623 695 1.94
Bank of Africa CI 2 305 261 1.71
Source: BRVM/Hudson/IAS
Top Picks for 2011
ETI – Solid Q3 10 results; pan-African expansion drive still
ongoing; strong technology platform; alliance with
Nedbank may receive more attention
Palm – Strong palm oil demand and prices, capacity
increases on the cards
SAPH/SOGB – Higher oil prices mean increase in price of
synthetic rubber and hence increase in demand for
natural rubber; increase in demand from China in
particular pushing prices for natural rubber
Sonatel – Market bell weather; dividend yield remains
attractive
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