Business Daily (Nairobi)
Morris Aron
10 March 2008
Kenya was the exception last month as stock trading picked up in key African markets, signalling renewed investor confidence in the continent.
Ai40 Index, which measures the level of trading in stocks of companies with market capitalisation of at least US$100 million across Africa, rose by 0.52 per cent to close at 205.84 points at the end of February representing a 7.65 per cent increase since the start of the year.
The Ai40 Index had dropped to the lowest levels in three months at the end of January on the back of growing concern among investors on the effects of the slowing global economy and political risk considerations in the continent.
While the continent recorded improved trading in February, Kenya's stock market ended on a slightly lower note as the Nairobi Stock Exchange (NSE) 20-Share index shed 14.72 points to stand at 4843.75. The index has in the past two months been erratic as a result of the political stalemate and post electoral violence, following the disputed 2007 election results.
Analysts expect the market to stabilise soon.
"Investors are optimistic that things have (will) return to normal. But there are still a number of challenges including management of stock brokers that need to be put under check, " said Resa Imbuye, an investment analyst with Old Mutual Asset Managers.
The caution follows the placement of Nyaga Stockbrokers under statutory management - the second such stock broker to fall in liquidity problems in less than a year.
"NSE needs to find a way of tying the loose ends in regulating stockbrokers before more harm is done," said Imbuye.
According to the monthly outlook summary for February, East African Breweries (EABL) was the best performer gaining 6.75 points to close at $2.14, while Kenya Airways jumped 6.7 per cent to close at $0.67 in the week ending February.
Across the continent, the best performing stocks at a round the same time included Egypt's Mobinil, which rose 7.7 per cent to close at $42.0, and Orascom Hotels and Development, which jumped 6.8 per cent to close at $16.29.
Other companies included El Ezz Steel Rebars, which gained 6.3 per cent to close at $13.56. El Ezz Steel Rebars continued to benefit from an increase in steel prices due to a shortage in raw materials for producing steel. Steel prices jumped to reach $1084 per ton, an increase of $108.4 per ton.
The worst performer for the week at the close of February was West African Portland Cement, which shed 10.1 per cent to close at USD 0.54.
"Then decline was an extension of the free fall witnessed in the previous week after the company announced disappointing full year results for the year ending December 2007," said Wole Famurewa of PHB Asset Management of Nigeria.
Banque De Tunisie was the second worst performer losing 5.7 per cent to close at USD 81.92.
Lafarge in Morocco dropped 5.1 per cent to close at USD 295.86.
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