Silk Invest investment tour - Morocco

The Silk Invest Maghreb team spent a very constructive day visiting existing and potential investment in Cassablanca. The whole economy is still growing strongly and optimism is in start contrast to developed markets. The purchasing power of the lage farming sector has been boosted by record rains and hence crop yiels. Morocco's production of soft wheat, durum wheat and barley has doubled.

At the same time, Morocco is still seeing direct investment from Gulf countries and asset sales by the government. Indeed, the whole Silk route theme is very strong. Firms like Maroc Telekom and Attijariwafa bank, the two largest companies, are expanding into Africa. For example, Maroc Telekom owns majority stakes in Gabon Telekom and Burkina Faso's Onatel.

We did witness some weaknesses. These include the high unemployment, rapid growth in banking loan books and the 'informal' sector of the economy. That said, valuations were attractive and more importantly underpinned by strong earnings growth. Delta (infrastructure) is expected to grow earnings by 64% and consrvative Attijariwafa Bank by 26%.

Visit to Addoha

We visited Moroccan property developer Addoha. The company is Morocco's leading real estate firm that benefits from the government-backed social housing drive. The recent boom in leisure, hotel and high-end housing projects is driving earnings forward.

We were particularly impressed with the company's one-stop-shop, where all the services requires to buy a house are under one roof (including credit assessment and legal). Clearly, something banks and/or property developers can learn from wherever they are in the world.

Tunisia

African Oxygen faces challenging year.

African Oxygen, the Silk African Lions largest holding, is putting up a great show in the face of the economic downturn. Although profits are down by 10% on the back of a decline in operating margin, revenues increased by 18%. Although we expect further deterioration towards the end off the year, on the back of commodity prices, we are happy with the groups 32% gearing and expect the stock to perform well from here.

Is Angola planning a devaluation?

Angola's President Jose Eduardo dos Santos dismissed central bank governor Amadeu Mauricio with immediate effect. This could be a prelude to devaluation. Efforts to keep the kwanza stable have weighed on the country's foreign reserves, which have fallen to $13.96 billion from $18.9 billion at the end of 2008. The kwanza has been pegged at around 75 to the U.S. dollar in recent years.

Surprise cut in Nigeria benchmark interest rate

Nigeria cut its benchmark interest rate to 8.0 percent from 9.75 percent. The Monetary Policy Committee reduced the reserve requirement to 1 percent from 2 and lowered the liquidity ratio for banks to 25 percent from 30.

Liquidity is an issue for the banking sector right now with interbank lending rates at 18 percent.

Suez canal sees revenue slump

The Suez Canal's revenues fell 22% Y-o-Y to USD327 million. The number of vessels passing through the Canal fell 15%. Canal revenues have deteriorated rapidly since late last year due to declining global trade activity.

The canal is a major contributor to Egyptian economic growth, contributing 0.7 percentage points to Egypt’s 7.2% growth in FY2007/08.

Workshop on 'Risk Management in Islamic Banking'

The Central Bank of Bahrain 'CBB' will play host to a workshop entitled 'Risk Management in Islamic Banking' which will take place at the Bahrain Institute for Banking and Finance from 14 - 16 April 2009.