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Africa investor Ai40 Weekly Commentary – 29 May 2017

By David | May 29, 2017

The Ai40 Investor’s Index is on a tear as it rose to the year’s high following solid gains from banking equities across the continent’s main economies. Mining stocks tracked by the Index – the Three Anglos in particular – had a less than pleasing performance as at Friday’s close. The index was up by 1.84 points, an increase of 1.95% from last week’s value of 93.51, to close Friday at a value of 95.34.

In the US, markets were mixed on Friday following a week of strong gains which saw two of the three main equity indexes record new highs. Gains were thanks to better-than-expected first quarter corporate earnings. According to bbc.com, “about three quarters of companies listed on the S&P 500 index exceeded earnings expectations.” US stock markets are closed today due to Memorial Day. On the global front, the Stoxx 600 – a pan-European Index – was 0.2% lower as the key exchanges recorded losses. In the UK, the FTSE100 rose by 0.4% as the Pound fell to 10-day lows.

At Friday’s close, the Dow Jones Industrial Average fell 0.01%, or 2.67 points, to close the week at a value of 21,080.28. The Nasdaq Composite Index gained 0.08%, or 4.94 points, to end the week at a value of 6,210.19, while the S&P 500 rose by 0.03%, or 0.75 points, to close Friday on a value of 2,415.82. According to Investopedia, global markets recorded mixed performances as “Japan’s Nikkei 225 rose 0.52% and Germany’s DAX 30 fell 0.29%.”

Gainers
Banking equities tracked by the Index continue to lead gains, as four of the five spots on the Gainers list were taken up by banking stocks. Leading the pack last week was Lagos-listed First Bank with a massive gain of 21.3%. Still in Nigeria, stocks for Guaranty Trust Bank rose by 11.4%. According to Reuters, Nigerian banking equities enjoyed large gains, “as overnight lending rates eased after central bank cash injections into the banking system.”

Abu Qir Fertilizers, an Egyptian chemicals company gained 12% last week while Standard Bank of South Africa was up by 9.1%. Shares for Nairobi-listed Equity Bank rose by 8.6% despite the bank’s first quarter profit falling by 6%. The bank attributed the decline to “government-imposed caps on commercial lending rates” according to Bloomberg.

Losers
A key feature on the Losers list last week was the three Anglo mining entities. Anglo American recorded the worst performance on the Index with a drop of 4.6%. Stocks for Anglo Platinum were down by 3.4% and AngloGold Ashanti fell 1.2%. Global miners with an exposure to the Chinese market were negatively affected last week due to a downgrade on China’s sovereign debt by ratings agency Moody’s. According to City AM, “miners are exposed to China because the vast resource needs of the world’s second-largest economy make it a crucial factor in deciding the demand for minerals and metals.” The action by Moody’s last week resulted in significant selling activity in commodities.

Elsewhere on the continent, Maroc Telecom stocks fell 4.5% and shares for Banque de Tunisie were down 2.9%.

Topics: Ai Press Office, All Sectors |