Africa investor Ai40 Weekly Commentary – 8 August 2016
It was another dip for the Ai40 Investors’ Index as Vodafone Egypt came crashing back down to reality after two straight sessions of out-of-this-world gains. The Index dropped 0.15 points, down from last week’s value of 93.60, to close on 93.45 points. This was a decline of 0.16%. For a third straight session, Nigerian stocks continued to feel the heat.
In US markets, a strong July jobs report and a robust earnings session for technology stocks sent the S&P 500 and the Nasdaq to record highs. The Nasdaq closed at its first record in more than a year: “Since firms started reporting earnings a month ago, companies from EBay Inc. to Seagate Technology Plc and Biogen Inc. have jumped more than 20 percent,” says Bloomberg. As for the jobs report, unemployment remains unchained at 4.9% but a second straight strong jobs report is the sign of a strengthening economy.
At Friday’s close, the Dow Jones Industrial Average was up 1.04%, or 191.48 points, to close the week at a value of 18,543.53. The Nasdaq Composite Index closed up by 1.06%, or 54.87 points, to end the week at a value of 5,221.12, while the S&P 500 gained 0.86%, or 18.62 points, to close Friday on a value of 2,182.87.
South Africa’s Standard Bank was the session’s strongest performer, notching up a 7.6% gain. The bank recently acquired a full banking licence in Côte d’Ivoire, which it plans to use as a gateway to the rest of the francophone West Africa region. Kenyan telecoms firm Safaricom was in second place with a jump of 3.8%. It was matched by South African miner Anglo Platinum. According to Mining mx, Anglo Platinum cut its net debt by ZAR3 billion in the six months to end of June, signifying a possible return to earnings.
Parent Anglo American was up by 3.6% and was followed by Egypt’s Commercial International Bank, which gained 3.4%. Egyptian stocks were on the rise late last week as the country prepared for a currency devaluation.
The goodwill generated by Vodafone Egypt’s positive results last month has dissipated at the telecoms company flip-flops on whether to buy a 4G licence. The country’s regulator NTRA has offered 4G licences to Orange Egypt, Vodafone Egypt and Etisalat, as well as Telecom Egypt, which owns a 45% stake in Vodafone Egypt. The licence would allow Telecom Egypt to enter the mobile market directly. Vodafone Egypt lost 20.0% on the Index.
Nigerian companies took the four other spots on the losers list: Zenith Bank, Guaranty Trust Bank, Nigerians Breweries and First Bank lost 7.6%, 6.4%, 6.1% and 5.7% respectively as investors pursued profit taking.
For more on the Ai40 Index, please, visit the Africa investor website at www.africainvestor.com