Monthly Highlights: August 2020

•  West African equity markets performance was largely positive as Nigeria and BRVM posted positive performance however Ghana closed in the red
•  East African equities were mixed with Kenya and Mauritius closing in the red, down -0.95% and -1.41% respectively, while all the other markets closed higher
•  North African equity markets witnessed broad-based gains across the region led by Egypt which gained +7.92% in USD
•  Southern African equities were negative on the back of broad-based losses across the region. In Botswana, the Bank of Botswana kept the benchmark rate unchanged at 4.25%.
 


African markets were generally mixed in August, with nine markets posting positive performances in dollar terms led by Egypt (+7.92%), Morocco (+5.93%) and Malawi (+4.54%), whilst the biggest losers were Zambia (-7.02%) and Namibia (-6.09%) with Zimbabwe -18.77% using OMIR. Egypt closed +7.9% higher on improving global markets and improved sentiment after the Libyan Government called for a ceasefire and for talks to remove all military forces from Sirte. Nigeria traded +3.7% higher thanks to some impressive earnings in the big caps. Zimbabwe was -18.8% due to a multitude of reasons from the President and his deputy clashing as economic tension grow, U.S. treasury sanctioning the President's adviser, Tagwirei, power supply cuts during peak periods, corn shortages and the list goes on.

West African equity markets performance was largely positive as Nigeria and BRVM posted positive performance however Ghana closed in the red

West African equity markets performance was largely positive as Nigeria and BRVM posted positive performance however Ghana closed in the red. In Nigeria, the unemployment rate rose to 27.1% in 2Q20 from 23.1% in the previous year, with unemployment among young people aged 15-34 the highest at 34.9%. Nigeria's 2Q20 GDP posted a sharp decline of -6.1% y/y due to the oil sector which was down -6.6% y/y as the oil production averaged 1.81m bopd2Q20 from 2.07m bopd1Q20. On the earnings front BUA Cement released below par 1H20 numbers (T/O: +1.2% y/y; PAT: -7.8% y/y) on the back of an increase in admin expenses 12.3% y/y. Guinness came out with poor FY20 (T/O: +20.6% y/y; PAT: N/A y/y) the loss was due to a negative revaluation of property, plant & equipment of N11.72bn which was comprised of an impairment loss (N1.46bn) and a write-off (NGN10.26bn). Flourmills released strong 1Q21 results (T/O: +14.7% y/y; PAT: +17.3% y/y), the main attributor was the growth was in sales in , agro allied +29.1% y/y and sugar +12.3% y/y. Nigerian Breweries released poor 1H20 (T/O: -10.8% y/y; PAT: -58% y/y) notably revenues dropped -17.6% q/q from NGN83.2bn in 1Q20 to NGN68.6bn in 2Q20 compounded by a higher admin expenses (6.7% y/y higher). Nestle released below par 1H20 numbers (T/O: -0.6% y/y; PAT: -16.8% y/y) as weak top-line was driven by the food segment which fell -2.5% y/y and accounted for 61.0% of total revenue, bottom line was impacted by admin costs which rose by 23.7 y/y and 97.1% q/q.. In other corporate news, FCMB Group announced that it entered into discussions with shareholders of AIICO Pension Managers to acquire the 70% stake held by AIICO Insurance Plc. In the Francophone region , Coris Bank's 1H20 results were impressive (GE: +18.8% y/y, PAT: +22.3% y/y) thanks to deposit growth of 28.4% y/y and strong loan growth of28.9%, while cost of risk fell -5.06%. Sonatel released benign 1H20 results (T/O: +0.7% y/y; PAT: -1.0% y/y) with EBITDA increasing +5.1% to XOF 247.0bn from XOF 235.8bn y/y. In Ghana, economic growth slowed in 1Q20 to 4.9% y/y vs. 6.7% in the same period last year, impacted primarily by the construction sector (-7.% y/y).

East African equities were mixed with Kenya and Mauritius closing in the red, down -0.95% and -1.41% respectively, while all the other markets closed higher

East African equities were mixed with Kenya and Mauritius closing in the red, down -0.95% and -1.41% respectively, while all the other markets closed higher. In Kenya, July foreign remittances rose 23.4% y/y to USD277mn, inflation was little changed and lower than projected at 4.36%y/y. Staying in Kenya, ABSA reported poor 1H20 earnings (GE: -1.7% y/y; PAT: -84.8% y/y) on the back of a +228.1% y/y increase in the loan loss provisioning to KES 5.4bn. Bamburi Cement released strong 1H20 numbers (T/O: -13.0% y/y; PAT: +83.5% y/y) asoperating costs dropped by 12.7% y/y, s. Standard Bank Kenya published uninspiring 1H20 results (GE: -6.4% y/y; PAT: -31.3% y/y) on the back of a rise in the loan loss provision expenses of KES 1.6bn y/y. Equity Group Holdings 1H20 results were mixed (GE: +6.7% y/y; PAT: -24.4% y/y), the bank's top-line growth was offset by impairment charges which increased by +773.4% y/y to KES8.0bn. Cooperative Bank of Kenya's 1H20 earnings were flat (GE: +11.6% y/y; PAT: -3.6% y/y), as net interest income increased by +11.6% y/y to KES15.9bn on the back of a strong growth in government securities +12.1% y/y to KES6.2bn. In Tanzania, we saw NMB released solid 1H20 numbers (GE: +11.4% y/y; PAT: +63.7% y/y) driven by growth in non funded income (+20.1% y/y) and lower impairment charges (-26.9% y/y). BK Group Rwanda reported good 1H20 numbers (GE: +15% y/y; PAT: +10.9% y/y) driven by strong loan growth of +25.8 % y/y which propelled interest income +19.1% y/y higher. Mauritius declared an environmental emergency after an oil spill from a grounded Wakashio ship owned by Japan-based Nagashiki Shipping which has caused immense environmental damage. On the earning front, SBM Holdings released weak 1H20 results (GE: -14.9% y/y, PAT: -19.8% y/y) the bank saw interest income increase +2.6%, growth in deposits improved +19.5% y/y and total loans grew +16.2% y/y. A higher credit loss expense +20.8% q/q drove negative bottom line performance. In Uganda, Umeme's 1H20 results were poor (T/O: +4.1% y/y; PAT: -64.5% y/y) as electricity sales slipped -2% in 1H20 due to lower economic activity, coupled with rising costs, cost of sales were, +17.8% y/y, admin costs +8.3% y/yand repair costs +33.8% y/y. Stanbic Uganda Holdings 1H20 numbers were disappointing (GE: +4.8% y/y; PAT: -4.9% y/y) mainly attributed to a large credit impairment charge and significantly lower transaction volumes.

North African equity markets witnessed broad-based gains across the region led by Egypt which gained +7.92% in USD

North African equity markets witnessed broad-based gains across the region led by Egypt which gained +7.92% in USD, as the IMF expects economic growth to rebound to 6.5% in FY21/22 after previously predicting GDP growth of 2% over the same period. In other news, the European Bank for Reconstruction and Development (ERBD) approved an extension of the USD100m on-lending facility to Banque Misr for SME's negatively impacted by COVID-19. On the results front, Juhayna Food Industries reported mixed 2Q20 results (T/O: -6.0% y/y; PAT: +9.0% y/y) as weak top-line was driven by lower juice revenues which declined -23% y/y, while profitability was driven by improved efficiencies as gross margin expanded 2.2pps y/y to 34.4% due to better deals and lower discounts negotiated with suppliers. DOMTY released disappointing 2Q20 numbers (T/O: +10.0% y/y; PAT: -15.0% y/y) as SG&A expenses grew +17% y/y to EGP116m which led to a 7% y/y drop in EBITDA to EGP68.4m. El Sewedy Electric's 2Q20 figures also disappointed (T/O: -10% y/y; PAT: -44.8% y/y) core earnings declined -54% y/y to EGP 452mn, on the back of a 35% y/y fall in the cables and raw materials segment (EGP3.6bn). In Morocco, M3 money supply rose 7.6% y/y and 0.4% m/m in July with the narrow money growth accelerating by 13.9% y/y compared to 12.7%y/y in the previous month. ERBD granted Morocco's local bank Credit Immobilier a EUR40m loan to finance its small and medium enterprises affected by the COVID-19 crisis. LabelVie Group released flat 2Q20 numbers (T/O: +4.0% y/y; PAT: not disclosed), sales were 5.3% y/y higher to MAD 2,254m driven by Carrefour Market supermarket segment +16.0%, while Atacadao hyper-cash segment recorded a -3% fall in 2Q20. The Tunisian economy shrank by -21.6% y/y in 2Q20, compared to the same period last year, severely impacted by the Covid-19 crisis with unemployment rising to 18% in the same period.

Southern African equities were negative on the back of broad-based losses across the region. In Botswana, the Bank of Botswana kept the benchmark rate unchanged at 4.25%.

Southern African equities were negative on the back of broad-based losses across the region. In Botswana, the Bank of Botswana kept the benchmark rate unchanged at 4.25%. Letshego Holdings Ltd released uninspiring 1H20 results (GE: -14.9% y/y; PAT: -23.5% y/y) with non-funded income declining significantly by -50.6% y/y to BWP 90.5mn, on the back of a drop in other operating income (-57.7% y/y), principally on income from insurance arrangements in Namibia, which makes up 46% of other operating income (1H19: 62%). In Zimbabwe, the inflation rate soared to 837.53% y/y in July and 35.53% m/m, whilst the RBZ maintained the key interest rate at 35%. In Malawi, the Reserve Bank maintained the benchmark interest rate at 13.5% and is forecasting GDP to grow by 6% in 2020 as the country recovers from drought and agricultural output improves.

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