The Nigerian banks are starting to pile into their local bond markets. Guaranty Trust Bank is seeking approval for a N200bn ($1.3bn) debt issue. This follows similar plans at First Bank (N500bn) and marks a much anticipated return for the banks who have dormant in issuance for three years. Likewise, Access Bank has also drafted plans to issue debt.
We would caution that a major credit risk is the potential for over-issuance of debt. In the interim, however, we look forward to observing the development of a much needed yield curve in Nigeria which will enable the banks to see longer term business objectives met as well as the potential for investors to play relative value investment strategies.
Friday, 31 July 2009
Tuesday, 28 July 2009
Zimbabwe sees strong trading volumes
Accordins to Renaissance Capital, Zimbabwe is now the third biggest equities market in sub-Saharan Africa, based on turnover. Volume has jumped from USD 50,000 to USD 1.3 million per day. The market value of shares listed has jumped from a bargain basement USD 1bn to USD 4bn in seven months.
Wednesday, 15 July 2009
Air Arabia expects stong Moroccan growth
Air Arabia wants its Air Arabia (Maroc) to become as big as it is within five years. The Dubai-listed carrier, the Gulf Arab region's largest low-cost airline, plans to expand by three to four aircraft per year. Moroccan shareholders own 51% of Air Arabia (Maroc), including family-owned holding company Holmarcom. The remaining 49% is held by listed Air Arabia and a Bahraini bank. Air Arabia (Maroc) will help meet growing demand for travel to Morocco the government expects to exceed 2008's record 8m visitors in 2009 and is aiming for almost 10m tourists in 2010.
Africa shrugs off worst of equity market correction.
It is good to see that equity markets appear to have finished the short term correction. Take a look, however, at how robust Africa has been in the sell off!
Tuesday, 14 July 2009
Botswana’s gross domestic product plunges 22%!
Botswana's GDP fell by 22% compared to Q4 2008. The decline in GDP was due to decreases in mining and quarrying industry, water and electricity, general government, hotels and restaurants. Manufacturing fell by 15% while mining and quarrying industry contributed most to the decline at 68.6%.
Wednesday, 8 July 2009
Almarai delivers again...
Almarai delivered 2Q SAR287m net profit in-line. Lower There was a positive surprise on the operating expenses front. SG&A as a % of sales improved significantly from 19.3% to 17.7%. The company is increasing its focus on cost controls to offset slowing sales growth.
Almarai, although a Saudi company, is the largest integrated dairy foods company in the world!
Wednesday, 1 July 2009
IMF say Tunisia is prudent and strong
The IMF has just noted in a report the Tunisian economy’s resilience. It said it reflects a strong posture of structural reforms and prudent fiscal and monetary policy stances.
Tourism, remittances and FDI have held up far better than expected. In addition, reserves of USD 9 billion are considered high. The IMF predicts growth of 3%
Tourism, remittances and FDI have held up far better than expected. In addition, reserves of USD 9 billion are considered high. The IMF predicts growth of 3%
Wednesday, 24 June 2009
Botswana cuts interest rates 150bps
The Bank of Botswana reduced rates by 150bp to 11.5%. It is expected that inflation will maintain a downward trend.
This is the third consecutive rate cut by the Monetary Policy Committee since rates topped, a total of 300bps.
This is the third consecutive rate cut by the Monetary Policy Committee since rates topped, a total of 300bps.
Tuesday, 23 June 2009
Uganda's National Insurance IPO
Uganda will sell a 40% government stake in Uganda's National Insurance in mid-July to list it on the Uganda Securities Exchange. In 2005, Uganda sold a 60% stake in the company to Nigeria's Industrial and General Insurance company.
Monday, 22 June 2009
United Nations looks to African agricultural expansion
The UN believes that the savannah, spanning 25 African nations, could be used to boost commercial farming. A new report says that some 400 million hectares in the Guinea Savannah zone - stretching from Senegal to South Africa - are ripe for commodity production. At present, only 10 per cent of that area is actually being farmed.
Africa can now make use of new technologies and improved business climates
Africa can now make use of new technologies and improved business climates
Friday, 19 June 2009
Auerbach Grayson open access to Iraq
Auerbach Grayson, a New York brokerage, has just become the first international company to trade in Iraqi securities.
Auerbach has signed an agreement with Rabee Securities, a Baghdad brokerage, through which it will provide research and trade execution.
Auerbach has signed an agreement with Rabee Securities, a Baghdad brokerage, through which it will provide research and trade execution.
Rwanda stock exchange starts
The first company began trading on the Rwandese bourse yesterday. Kenya Commercial Bank is currently cross-listed both Uganda and Tanzania and joins a number of Kenyan companies seeking to gain a regional presence.
Sunday, 14 June 2009
New Saudi bond market opens
Saudi Arabia new bond market opened yesterday. Foreigners can tap the new investment tool in the Middle East's largest economy for the first time. The first bond session yesterday involved SR21billion (Dh20.5bn), including SR16bn bonds by Saudi Arabian Basic Industries CorporationSaudi Arabian Basic Industries Corporation and SR5bn by Saudi Electricity CompanySaudi Electricity Company.
Dubai and Abu Dhabi have spearheaded one of the largest bond issues in the region over the past two months.
The launching of a bond market in Saudi Arabia is the latest in a series of moves announced by the CMACMA to develop its financial market.
Dubai and Abu Dhabi have spearheaded one of the largest bond issues in the region over the past two months.
The launching of a bond market in Saudi Arabia is the latest in a series of moves announced by the CMACMA to develop its financial market.
Tuesday, 9 June 2009
Saturday, 6 June 2009
New beginning in Arab US relations
President Barack Obama’s call for a “new beginning” in relations with the Muslim world set a nice tone for relations between the US and the Arab world. The address, form the golden-domed Grand Hall of Cairo University called on all to societi end the “cycle of suspicion and discord”.
Citing a verse in the Koran that tells Muslims to “speak always the truth,” Obama said that that to move forward, “we must say openly to each other the things we hold in our hearts, and that too often are said only behind closed doors.”
He outlined six friction points between the U.S. and the Muslim world:
Violent extremism
Iran’s pursuit of nuclear arms
Democracy in Muslim nations
Religious freedom
Rights of women
Citing a verse in the Koran that tells Muslims to “speak always the truth,” Obama said that that to move forward, “we must say openly to each other the things we hold in our hearts, and that too often are said only behind closed doors.”
He outlined six friction points between the U.S. and the Muslim world:
Violent extremism
Iran’s pursuit of nuclear arms
Democracy in Muslim nations
Religious freedom
Rights of women
Friday, 29 May 2009
African Development Bank AGM
The Annual General Meeting of the African Development Bank was held on 13-14 May in Dakar, Senegal. The theme of this year’s meetings was Africa and the financial crisis.
At a general level, there was much discussion over the shape and timing of the world economic recovery, and concomitant impact for risk appetite. This discussion came from both sides, African policymakers and private sector investors.
There was some scepticism over the extent to which the recovery is sustainable and the degree to which optimism shown in the market had diverged from fundamentals. African policymakers, for their part, recognised the impact of the global crisis on Africa, after earlier periods of denial and complacency. Policy reversals were now seen as the biggest threats in the region, but so far signs for most countries were encouraging.
At a general level, there was much discussion over the shape and timing of the world economic recovery, and concomitant impact for risk appetite. This discussion came from both sides, African policymakers and private sector investors.
There was some scepticism over the extent to which the recovery is sustainable and the degree to which optimism shown in the market had diverged from fundamentals. African policymakers, for their part, recognised the impact of the global crisis on Africa, after earlier periods of denial and complacency. Policy reversals were now seen as the biggest threats in the region, but so far signs for most countries were encouraging.
Thursday, 28 May 2009
Air Arabia
Silk Invest has Air Arabia in its Arab Falcons fund. We met with the company's Director of Finance and Administration to review how things were going in the light of the recent uptick in oil prices (a big component in any airlines costs).
The company has a natural fuel hedge. In effect, when oil price is high, margins are down but revenues go up as the economy is strong. That said, the company hedged 50% of its fuel for this year at USD 55. Good news.
The biggest takeaways are that this is actually a different business model from the European low cost airlines. Firstly, only 30% of tickets are sold through internet. The company has an extensive general sales agent network that adds a fee to the basic prices it distributes. This is difficult to duplicate and is very powerfull in the GCC and India where internet penetration is low. Another big difference is that the Middle East does not close airports at night. As such, the company flys 24/7. Its planes fly 14 hours a day, the highest in the world. (that is twice most other airlines!!!) Its distances are longer on average, versus the small 'hops' in Europe. This means four flights a day, instead of six. As a result, turnaround times are less critical. The other big difference is that it is a 'dry airline'. As such, it does not get revenue from drink sales. By the way, this is not a negative, its customers like that! That said, it gets 2% revenue from excess bagage sales. The final difference is that Sharjah airport owns 17% of company, so new competitors flying our of Dubai can't compete on price as it gets discounted landing fees.
The company has a natural fuel hedge. In effect, when oil price is high, margins are down but revenues go up as the economy is strong. That said, the company hedged 50% of its fuel for this year at USD 55. Good news.
The biggest takeaways are that this is actually a different business model from the European low cost airlines. Firstly, only 30% of tickets are sold through internet. The company has an extensive general sales agent network that adds a fee to the basic prices it distributes. This is difficult to duplicate and is very powerfull in the GCC and India where internet penetration is low. Another big difference is that the Middle East does not close airports at night. As such, the company flys 24/7. Its planes fly 14 hours a day, the highest in the world. (that is twice most other airlines!!!) Its distances are longer on average, versus the small 'hops' in Europe. This means four flights a day, instead of six. As a result, turnaround times are less critical. The other big difference is that it is a 'dry airline'. As such, it does not get revenue from drink sales. By the way, this is not a negative, its customers like that! That said, it gets 2% revenue from excess bagage sales. The final difference is that Sharjah airport owns 17% of company, so new competitors flying our of Dubai can't compete on price as it gets discounted landing fees.
Tuesday, 26 May 2009
Equity bank grows into slowdown
Kenya’s Equity Bank results for the quarter to March 2009 saw operating income
rise 52% and Profit After Tax rise 26%.
There was a 59% fall in loan loss provisions but a 126% rise in staff costs. Needless to say, the cost income ratio rose to 64% compared to 60% for FY 2008. Total NPLs, worryingly rose by 164% against a bigger Total balance sheet(up 45% year)
The slowing domestic economy is starting to have an impact. Although the bank delivered a good bottom line progression, there were clearly growing pains in this set of results.
rise 52% and Profit After Tax rise 26%.
There was a 59% fall in loan loss provisions but a 126% rise in staff costs. Needless to say, the cost income ratio rose to 64% compared to 60% for FY 2008. Total NPLs, worryingly rose by 164% against a bigger Total balance sheet(up 45% year)
The slowing domestic economy is starting to have an impact. Although the bank delivered a good bottom line progression, there were clearly growing pains in this set of results.
Safaricom slips despite higher revenue
Safaricom saw a 23.9% year on year decline in net profits to Kshs 10.6 billion, and a 30.5% decline in earnings.
Revenue was, however, up 14.8%, boosted by an 83% growth in revenues from SMS, MPESA and data, which accounted for 12.9% of the total revenues.
Revenue market share remained at a steady 83%. The weakness was largely down to a fall of 23% in ARPU.
Revenue was, however, up 14.8%, boosted by an 83% growth in revenues from SMS, MPESA and data, which accounted for 12.9% of the total revenues.
Revenue market share remained at a steady 83%. The weakness was largely down to a fall of 23% in ARPU.
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