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The East African : June 2nd 2014
MONEY AND EQUITY MARKETS MAY 31 - JUNE 6, 2014 STOCKS EXPECTED TO PERFORM WELL Regional bourses to post stronger performances in second quarter P≥ojected low inflation ≥ates will mean mo≥e money fo≥ investments A JOINT REPORT The EastAfrican R egional bourses are expected to post stronger performances in the second quarter of 2014 than they did in the first quarter, capping what has been a rewarding period for investors across the region. Most firms have doled out increased dividend payouts on the back of better financial results for 2013 and the first quarter of 2014. Stocks are expected to perform well in the coming months due to projected stable inflation and initiatives introduced by the Uganda, Rwanda, Tanzania and Kenya bourses. Analysts project that the region’s bourses will benefit from relatively low inflation rates, which should leave consumers with more money to invest. Steady foreign interests in regional stockmarkets is expected to see indices rise significantly this year, alongside the turnover. By last week, turnover at the Rwanda Stock Exchange (RSE) had risen 28-fold to Rwf222.5 million ($322.021) from Rwf7,878,200 ($11,400) in March, riding on huge volumes of shares traded on Bank of Kigali (BoK) and Bralirwa counters. In Tanzania, banking, in- vestment and manufacturing companies continue to perform strongly attracting more long-term investors with the aim of making huge profits. The Dar es Salaam Securities Exchange (DSE) index last week reached 2023.9 points, compared with 1958.09 in March. A number of stocks at the Uganda Securities Exchange (USE) are forecast to remain flat in the second half of 2014, with many investors apparently jittery about interim earnings while anticipated increases in government borrowing are likely to pile more pressure on interest rates earned on treasury bonds. spur upward movements in share prices but the impact of rising interest rates on treasury bonds seems mixed, with some investors more determined to wait out the difficult economic spell,” he added. At the Nairobi Securities Exchange (NSE), banking stocks continue to drive activity, riding on improved profitability that saw Equity, KCB Group, StanChart and Co-operative Bank post improved 2013 earnings. “The second quarter will remain strong, pushed by the performances of banks and companies, which will keep the indices and volumes afloat,” said Kamau Kuria an analyst at Kestrel Capital. The RSE Local Share PREDICTED ACTIVITY Steady foreign interest in regional stockmarkets is expected to see indices rise significantly this year, alongside the turnover. In Tanzania, banking, investment and manufacturing companies continue to perform strongly attracting more longterm investors with the aim of making huge This trend could mirror similar patterns witnessed at the local bourse since the beginning of the year, with many stocks posting little or no gains while a few blue chip shares have accounted for sharp gains in the All Share Index (ALSI) and Local Stock Index (LSI). Data obtained from the USE shows that the ALSI opened at 1,522.46 points in Janu- The second quarter will remain strong, pushed by the performances of banks and companies.” Kamau Kuria, an analyst at Kestrel Capital, Nairobi profits. At the Nairobi Securities Exchange, banking stocks continue to drive activity, riding on improved profitability. ary; it hit a high of 1,571.16 later that month but fell to 1,420.16 in early February. It closed at 1,503 points at the end of March. “Conclusion of the divi- dend season between April and May usually leads to modest performance in share prices after June. We expect accelerated economic recovery during the last quarter of 2014 and this in turn will encourage some investors to take up fresh positions on various counters so as to profit from a rebounding economy,” said Arthur Nsiko, stockbroker and research analyst at African Alliance Uganda. “This will Index, which tracks the bourse’s two local stocks, has fallen to 258.52 from 263.05 in the first quarter. Analysts at the Kigali bourse said the slump is blamed on the drop in BoK share price, which was trading at Rwf 312 ($0.45) last week from Rwf329 ($0.47) in March. Bralirwa shares held up to trade at Rwf875 ($1.3), as at the close of March. The Uganda All Share In- dex rose to 1562.15 points last week while turnover rose to Ushs1.8 million ($699) riding on 6,225,476 shares traded. Several initiatives are an- ticipated to boost the bourses’ performances, analysts said. Uganda for example plans to lower the settlement period by end of May, which will allow stocks to rise or fall in multiples of one shilling as opposed to the five-shilling multiple under the current rule. This is expected to increase trading activity of highly priced stocks and help boost price discovery. The anticipated listing of a natural gas exploration company on the DSE in June is likely to stir up business at the Dar bourse despite investors’ preference for profitable bonds to stocks. By Scola Kamau, Benard Busuulwa and Erick Kabendera Business watch Orca earnings drop over Tanesco’s failure to pay its debt Orca Exploration Group Inc, an international public company engaged in hydrocarbon exploration, development and supply of natural gas in Tanzania saw its earnings drop in the first quarter of the year. The bad performance was blamed on Tanzania Electric Supply Company Ltd’s (Tanesco) failure to pay for its deliveries. Earnings plunged to $1.6 million down 47 per cent from the prior year period. Tanesco currently owes Orca $60.9 million, of which $57.6 million is in arrears. The firm said it will need additional funding for its ongoing operations if Tanesco does not meet its costs. TransCentury eyes PE funds after selling RVR shares Infrastructure investment firm TransCentury has announced plans to invest in the oil and gas; power generation; mining; transport and logistics industries after selling a portion of its shares at the Rift Valley Railways. According to Gachao Kiuna, Transentury’s chief executive officer, the investment firm had recouped Ksh3.8 billion ($43.6 million) which it sought to invest in private equity funds and consumer goods companies. Mr Kiuna said the firm is in the process of acquiring a five per cent stake that Aureos East Africa Fund LLC owns in East African Cables Ltd. National Bank of Kenya looks to raise $149.4m in rights issue 53 A National Bank of Kenya branch. Picture: File National Bank of Kenya expects to raise Ksh13 billion ($149.4 million) in a rights issue subject to regulatory approvals as the bank seeks to offset any reduction in capital base occasioned by the redemption of the participating non-cumulative preference shares. Last week shareholders of the bank’s preferred shares gave the lender the go ahead to redeem all of its issued and outstanding non-cumulative participating preferred shares for cash at a redemption price to be determined. The bank’s chief executive Munir Ahmed said Treasury and NSSF are set to earn a premium from the redemption of their preferential shares. Bank of Africa raises $19.5m for its expansion strategy Bank of Africa has raised Ksh1.7 billion ($19.5 million) in a rights issue to aid its expansion strategy, which plunged the company into slowed profits in the first quarter of 2014. The lender’s profits in Kenya fell 24 per cent compared with a similar period last year. The funds will boost the company at a time when it is seeking a strategic partner for further capital injection to expand its retail business.
May 26th 2014
June 9th 2014