Weekly Investor Update (September-WeekTwo-2024)

13 min Read September 13, 2024 at 5:00 PM UTC

Monday

BRVM Stock Market Sees Continued Growth in First-Week September

The BRVM stock market continued its upward trend for the third consecutive week, driven by the strong performances of Sonatel (SNTS), Ecobank CI (ECOC), and Orange CI (ORAC), adding 45 billion FCFA, 41.01 billion FCFA, and 30.13 billion FCFA in market capitalization, respectively.This positive momentum saw key indices rise, with the benchmark BRVM Composite up 2.21% to 259.27 points, BRVM 30 increasing 2.18% to 130.01 points, and BRVM Prestige up slightly by 0.52% to 114.63 points.Unilever CI (UNLC) reported a 2023 profit of 640.34 million FCFA, a sharp reversal from its 2022 loss of 6.38 billion FCFA. Tractafric Motors CI (PRSC), saw a significant drop in its first-quarter 2024 profit, down 90.40% to 81.03 million FCFA. Société Générale CI (SGBC) posted an 8.5% profit increase, reaching 48.23 billion FCFA for the first half of 2024.

The BRVM stock market continues to exhibit resilience, buoyed by the performance of key stocks. Despite the gains, the market reflected mixed performances among individual companies. Unilever CI’s return to profitability after a challenging 2022 and Société Générale CI’s steady growth are positive signs for the market. However, Tractafric Motors CI’s sharp profit decline highlights challenges in certain sectors. The continued listing of shares from companies like BOA Benin and BOA Niger suggests that market activity remains vibrant, reinforcing investor interest in the region. The BRVM remains a focal point for African market growth, with key sectors and companies continuing to shape its trajectory.

Starlink Launches in Zimbabwe After Securing Operating License

Elon Musk’s Starlink has officially launched in Zimbabwe, three months after securing an operating license. Partnering with IMC Communications, Starlink will offer satellite internet services in the country, marking itslatest expansionin Africa.Customersin Zimbabwe can purchase Starlink hardware for $350 with a $50 monthly subscription, or opt for Starlink Mini at $200 with a $30 monthly fee. Unlike in other African countries where local currencies are accepted, Zimbabwean customers will be charged in U.S. dollars, which may pose challenges in a country whereforeign currency is often scarce.Starlink’s entry into Zimbabwe comes as only 34.8% of the population had internet access as of 2021. The satellite internet provider aims to address connectivity gaps, especially in rural areas where internet penetration has been limited. Since its African debut in Nigeria in January 2023, Starlink has rapidly expanded across the continent, now serving14 African countries.

Starlink’s expansion into Africa is aimed at revolutionizing internet access across the continent, where only 40% of the population is connected online. Zimbabwe is the latest addition to Starlink’s African network, following launches in countries like Nigeria, Kenya, and Mozambique. The satellite internet provider’s entry into Zimbabwe could have significant implications for rural connectivity and help lower high data costs. However, Starlink’s journey in Africa has not been without challenges. Regulatory hurdles, such as the South African government’s ban on Starlink kits, highlight the difficulties of expanding into the region. While some Zimbabwean lawmakers initially opposed Starlink’s operating license, citing concerns over Elon Musk’s other ventures, the telco regulator approved the service in May 2024.

AgDevCo Raises $32M to Support Early-Stage Agro Ventures in Africa

AgDevCo, a specialist investor in African agriculture, has secured $32 million in funding from the UK’s Foreign, Commonwealth, and Development Office (FCDO) to set up AgDevCo Ventures, a new initiative that will back early-stage agribusinesses in Africa.Theventurewill provide much-needed capital to small and medium enterprises (SMEs) with investment sizes ranging from $1 million to $3 million, focusing on the “missing middle” segment often overlooked by private investors.AgDevCo Ventures will initiallyconcentrateon East Africa, including Kenya, Uganda, Tanzania, and Rwanda, with plans to expand across the continent and prioritize African and female-owned businesses to promote inclusivity. It is also raising an additional $25 million from development finance institutions and family offices to kickstart operations by early 2025.

AgDevCo Ventures marks the firm’s return to the early-stage agribusiness space after shifting its focus to larger investments in recent years. The new initiative aims to fill the gap in funding for SMEs, particularly in Africa’s agriculture sector. These businesses face barriers such as high transaction costs and perceived risks, which deter traditional investors. With support from the FCDO, AgDevCo has committed $210 million to 38 investments across sub-Saharan Africa as of June 2024. The company’s portfolio includes significant investments in Kenyan agribusiness Agris, Pan-African Hatch Africa, and Côte d’Ivoire’s Cashew Coast. By addressing the “missing middle” and focusing on climate resilience, it is poised to play a vital role in the future of sustainable agribusiness on the continent.

AngloGold Gets Egypt’s Sukari Mine in $2.5B Centamin Acquisition

AngloGold Ashanti has agreed to acquireCentamin Plcin a deal valued at £1.9 billion ($2.5 billion), as gold prices surge, prompting miners to expand. The acquisition givesAngloGoldcontrol of Egypt’s Sukari mine, one of the world’s top gold deposits, despite historical operational and political issues following Egypt’s 2011 uprising.The cash and share offer includes a 37% premium to Centamin’s closing price on September 9. AngloGold’s shares dropped by as much as 9.8% in Johannesburg, marking its largest intraday decline in three years, while Centamin surged 24% in London.The move solidifies AngloGold’s shift away from South Africa after selling its lastminethere in 2020. Upon completion, AngloGold shareholders will hold 83.6% of the merged company, with Centamin investors owning 16.4%.

AngloGold Ashanti’s acquisition of Centamin Plc marks another step in the growing trend of consolidation among gold miners as bullion prices approach record highs. By adding Egypt’s Sukari mine to its global portfolio, AngloGold strengthens its position as a leading producer, with assets across Australia, Congo, and now Egypt. This deal reflects broader industry dynamics, as major gold producers like AngloGold and Gold Fields seek to acquire smaller rivals to capitalize on the rising value of gold. The 37% premium paid for Centamin underscores the urgency to expand while prices are high.

Egypt’s Inflation Unexpectedly Quickens After Fuel Subsidy Cuts

Egypt’s inflation rate rose to 26.2% in August, up from 25.7% in July, marking an end to five months of deceleration, according to the state statistics agency CAPMAS. The increase follows fuel subsidy cuts, disrupting expectations of an interest rate cut for the first time since 2020.The North African nation’sinflationclimbed 2.1% monthly in August, the highest rate sinceFebruary, compared to a 0.4% rise in July. Food and beverage prices, a key inflation component, increased 29% annually, slightly down from 29.7% in July.Egypt’s inflation had been slowing despite a nearly 40% currency devaluation in March, which helped secure a$57 billion bailoutled by the IMF and UAE. However, recent fuel and electricity price hikes have temporarily reversed the trend.

Egypt’s inflationary pressures have resurfaced after recent fuel subsidy cuts, ending five months of declining inflation and raising concerns about the near-term inflation outlook, particularly as transportation and other costs rise in response. While inflation was initially curbed by earlier currency devaluations and a global bailout, the recent cuts to fuel and bread subsidies have complicated the country’s disinflationary efforts. Economists expect the Central Bank of Egypt to hold interest rates steady at 27.25%, delaying any potential rate cuts until inflation slows, likely in the first quarter of 2025.

UK Turns to Francophone Africa for Trade with $1.3B in Guarantees

The UK has significantly expanded its business presence in French-speaking West and Central Africa, targeting new markets for its exports. UK Export Finance (UKEF), the state body that supports British exports, had backed transactions in francophone Africa worth £1 billion ($1.3 billion) by the end of the 2023-24 financial year.That’s a sharp rise from £3 million in 2017-18, according to Steven Gray, UKEF’s regional lead for West Africa. Francophone countries now account for 13% of UKEF’s portfolio in Africa, despite historical language barriers.Africa has become UKEF’s largest market for new business, with recent projects including a £106 million drainage upgrade in Benin and a £68 million road construction project in Togo. Rising interest rates have increased reliance on loan guarantees for such investments.

The UK is positioning itself as a key player in francophone Africa’s economic landscape through UKEF’s increased financial backing. With the European Union’s reduced trade engagement post-Brexit, UKEF has aggressively pursued opportunities in Africa, now the largest market for its new business. Major investments in infrastructure projects in Benin and Togo underscore the role of government-backed financing in these efforts. While the UK makes inroads, France’s Bpifrance and China’s Sinosure remain active, creating a competitive environment for investment in the region. Both the UK and French agencies are focusing on building local partnerships to support economic development, signaling an ongoing race to capture Africa’s growing markets.

Ghana’s Inflation Falls to 29-Month Low, Boosting Rate Cut Prospects

Ghana’s annual inflation rate dropped to a 29-month low in August, raising the likelihood of an interest rate cut when policymakers announce their decision on September 30.Consumer prices rose 20.4%, down from 20.9% in July, according to Government Statistician Samuel Kobina Annim.Thefallwas driven bydeflationin key categories like milk, oils, fats, and fruits and nuts. Food price growth eased to 19.1%, down from 21.5% in July, while non-food inflation increased slightly to 21.5%. Prices fell 0.7% month-on-month.

Theinflationslowdown and the stability of the Ghanaian cedi may prompt the Bank of Ghana to cut interest rates after maintaining the key rate at 29% since January. Analysts predict a 100 basis-point cut, focusing on longer-term inflation expectations rather than immediate targets. This comes as the cocoa-, gold- and oil-producing West African country battles to emerge from an economic crisis.

EU Grants $35M to Boost South Africa’s Green Hydrogen Industry

The European Union (EU) will provide two grants totaling €32 million ($35 million) to help South Africa develop its green hydrogen sector.The funding aims to leverage South Africa’s renewable energy resources, such as wind and solar, to produce green hydrogen, a potential clean fuel alternative for ships and heavy industry.The grants will attract further investments into South Africa’s hydrogen economy. The first €25 million grant is expected to generate 10 billion rand ($558 million) in public and private investment while the second €7 million grant will support hydrogen studies and pilot projects by state-ownedTransnet SOC.

Green hydrogen is produced by using renewable energy to split water into hydrogen, a process that does not emit greenhouse gases. Despite being costly compared to oil derivatives, green hydrogen is expected to become more competitive as technology improves and fossil fuel penalties rise. It is also proving to be the latest energy commodity scramble among a few African countries, includingNamibiaandMorocco. With its vast resources, Africa has the potential to become one of the main global renewable energy hubs. But it remains to be seen whether its nations can deliver a cost-competitive product in an emerging global hydrogen sector.

US Bitcoin ETFs See Record Outflows Amid Broader Market Uncertainty

US Bitcoin exchange-traded funds (ETFs) have experienced their longest streak of daily net outflows since launching at the start of the year.Over the eight days through September 6, investors pulled nearly $1.2 billion from a group of 12Bitcoin ETFs, according to data from Bloomberg. The withdrawals come amid broader concerns about global economic growth, which have impacted both stocks and commodities.While Bitcoin’s year-to-date rally remains around 30%, the recent selloff has cooled its momentum, and the cryptocurrency is likely to trade within a $53,000 to $57,000 range ahead of key US inflation data.

The pullback in Bitcoin ETFs coincides with mixed US jobs data and deflationary concerns in China, contributing to heightened uncertainty in financial markets. Bitcoin itself has faced challenges, falling roughly 7% in September. However, the cryptocurrency saw a modest 2.4% recovery on Monday, rising to $55,682 by 10 a.m. in New York. Some relief for Bitcoin could be attributed to prominent influencers closing short positions and political developments, including Donald Trump’s rise in pro-crypto polling ahead of the US presidential election, which may have sparked increased demand for options hedging. The outcome of the US inflation data could shape expectations for Federal Reserve policy, influencing Bitcoin’s future trajectory.

West African Central Bank Maintains Key Rate on Inflation Concerns

The Central Bank of West African States (BCEAO) opted to maintain its key interest rate at 3.50% during its 3rd Monetary Policy Committee meeting this week in Senegal, amid persistent inflation and regional economic challenges.Inflation in WAEMUreached 4.1% in the second quarter of 2024, up from 2.9% in the previous quarter, driven by unfavorable agricultural conditions, supply disruptions, rising energy prices, and increased costs of imported food products.The Central Bank projects an average inflation rate of 3.7% for 2024, with expectations for a return to the target range of 1%-3% in 2025, aided by improved agricultural output and falling global food prices.

For the BCEAO, prudence is needed in navigating the current economic climate, aiming to balance growth support while managing inflation risks. WAEMU’s economic growth forecast for 2024 remains strong at 5.9%, bolstered by structural reforms and resilience in key sectors such as agriculture and services. In addition to maintaining the key rate, the BCEAO kept the marginal lending window rate at 5.50%. These measures signal continuity in monetary policy, ensuring favorable financing conditions while avoiding further inflationary pressures.

Benin Textile Industry Expands with First US Polo Assn Clothing Export

The Beninese textile industry continues its upward trajectory with the recent announcement of a new clothing export to Europe for the American brand, US Polo Assn.The French-speakingWest African nation confirmed the delivery of the first batch of over one million pieces of clothing, including hoodies, polo shirts, and t-shirts, to Italy-basedIncom SPA, the brand’s licensed distributor.This marks a significant milestone for Benin’s “Made in Benin” initiative, with previous successfulexportsto brands like The Children’s Place andKiabi.As Africa’s leading cotton producer, Benin’s focus ontransforming its raw materials into value-added productscontinues to enhance the country’s position in the global textile market.

Benin’s successful delivery of US Polo Assn. clothing to Europe highlights the country’s growing reputation as a producer of high-quality textiles. With its focus on turning raw cotton into finished products, Benin is expanding its footprint in the global apparel market, showcasing its capability to meet international standards and attract major global brands. This development marks another step toward enhancing the value of its cotton production and boosting its industrial sector.

Vivo Energy Raises 2023 Dividend Payout After 13% Profit Growth

Vivo Energy bucked the hydrocarbon sector’s weak performance to close the 2023 financial year with strong results, posting a 13% increase in net profit to 4.01 billion FCFA ($6.7 million), up from 3.75 billion FCFA the previous year.Building on this success, the BRVM-listed company (SHEC) increased its dividend payout for the third consecutive year, rewarding shareholders with a net dividend of 57 FCFA per share, representing a total dividend of 4.01 billion FCFA.This dividend offers a yield of 6.16%, based on the share price of 925 FCFA as of September 27. The company’s positive performance has also driven its stock price upward, with Vivo Energy CI shares rising by17.09%since the start of the 2024 financial year after a 5.33% gain in 2023, signaling continued investor confidence.

In the second quarter of 2024,Vivo reported a significant increase in its financial performance, reflecting a robust response to market demands and operational strategies. The company’s revenue, as of June 30 reached FCFA 298.1 billion, marking a 4% increase from FCFA 287.6 billion recorded during the same period in 2023. This growth can be attributed primarily to a notable 9% rise in sales volumes, particularly within the aviation and corporate sectors, indicating a strong demand for energy products in these areas. The company has capitalized on this demand, enhancing its market position and operational efficiency.

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Articles do not reflect the views of DABA ADVISORS LLC and do not provide investment advice to Daba’s clients. Daba is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.