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Weakening SEK benefited the fund

Stronger commodity prices helped most African stock markets to rebound in February. The SEK also softened slightly against most African currencies, which favoured the Carnegie Afrikafond fund.

It is worth noting the recent strength of many commodity stocks, and Seplat, Lucara and BHP Billiton were the fund’s best performers.

BHP Billiton released half-year results. Its losses were over USD 5 billion, with USD 7 billion in asset impairment. The company sharply reduced its dividend and announced even lower investment in coming years. The share reacted positively.

Shoprite’s half-year results showed a 12 percent year-on-year profit gain. Noteworthy was that operations outside South Africa are growing far faster than in that country, despite the slowdown in many African markets. But the South African arm still dominates revenues. There are currency risks associated with its revenues in Angola and Nigeria, so it is not impossible that we will see downward revisions in the future.
Nigerian stock market volumes have fallen sharply, and the daily trading volume is now USD 8-10 million.

Interest has waned in connection with uncertainty surrounding government finances, foreign exchange reserves and how lower oil prices will hit the banking system in the short term.

Attijariwafa Bank’s results, profits and dividends are growing more than the market predicted. New lending was not as strong as expected, given that the Moroccan economy is growing at a healthy pace, which the company attributes to lower subsidies to be financed and that the construction sector has reduced its borrowing needs. Both of these changes are structural in nature and should be good for future growth.

Although there is good reason to worry about some short-term macroeconomic factors on the African continent, it appears that the market has already priced in much of this. The volatility that occurred in the markets creates opportunities for the future, to build positions in well-managed companies that have long been regarded as overpriced.

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