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South Africa: A Revamped Grand Old Lady – Aveng’s Journey Back From the Brink

Engineering firm Aveng once traded at R44/share. But risky projects, poor capital allocation decisions and poor operating performance saw debt spiral while revenue collapsed. A turnaround plan, announced in 2018, aimed to set the company on a new footing. It seems to be on track.

It is so much easier to break something than rebuild it. This is a well-worn truism, but ask Aveng’s CEO, Sean Flanagan, and its CFO, Adrian Macartney, who have been involved in the company’s restructure and turnaround since 2017, and they just roll their eyes.

“We have been up to our eyeballs,” says Flanagan. “Putting the group back on a positive trajectory has required that many hard and tough decisions be taken.” This includes the sale of about 14 businesses, including Aveng Grinaker-LTA Construction, the once high-flying construction business in 2019, which was particularly difficult. “Sometimes you have to chop off a limb to save a body,” Flanagan says.

Management believes the company’s results for the year to June, released on Monday 30 November – the last day of the JSE’s Covid-19 grace period – are something of a milestone.

At the half-year results in February, Aveng reported its first operating profit in many years…

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Zimbabwe: Mystery Buyer Snaps Up Majority Stake in ZB

Trading on the Zimbabwe Stock Exchange yesterday was boosted by a $1,6 billion trade in ZB Financial Holdings.

A total 66 528 658 shares changed hands that means the financial services group now has a new major shareholder owning 37,79 percent.

The new shareholder is an investment vehicle reportedly linked to a local businessman whose name cannot be disclosed in the meantime.

Prior to this deal the National Social Security Authority (NSSA) was the major shareholder owning 37,79 percent.

Transnational Holdings Limited (THL), which is linked to veteran banker Nicholas Vingirai, is the second major shareholder with a 21,44 percent.

According to the Banking Act Section 26 sub section 3 (a) before approving the acquisition of a significant interest in a banking institution, the registrar shall, through the (RBZ) Governor, consult the Minister (of Finance and Economic Development) and shall provide the Minister with such information regarding the proposed acquisition as the Minister may reasonably require.

In addition, no person shall knowingly acquire or obtain a significant interest in a banking institution unless the registrar has given his written approval of the acquisition.

Also no banking institution shall permit any one person to acquire or obtain a significant interest in it unless the Registrar has given his written approval of the acquisition.

As a result of the ZB Financial Holdings deal, $2,4 billion worth of shares changed hands on the day. This is the highest single day turnover in years.

CBZ also got a sizeable chunk amounting to $620 million recently.

Cafca was the day’s top riser up 19,97 percent to $73,25 while Masimba gained 18,83 percent to $6.

Zimplow led the fallers down 2,17 percent to $4,5.

Meanwhile, shares worth $40 million and constituting roughly 5 percent of Powerspeed changed hands on Friday last week at price of $1,92 per share.

The transaction come as Powerspeed, which is originally a light engineering business focused on the electrical sector, but now dominated by the Electrosales retail operation, plans to de-list from the ZSE.

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Tanzania: Mobile Trading Platform to Transform Dse Activities

Dar es Salaam — Trading at the Dar es Salaam Stock Exchange (DSE) will likely go up, thanks to a mobile trading platform.

Chief executive officer of Capital Markets and Securities Authority (CMSA) Nicodemus Mkama said yesterday the new equities’ mobile trading platform will stimulate growth of the country’s capital markets.

Dubbed ‘Hisa Kiganjani,’ the platform, which was launched yesterday by DSE will allow investors to buy and sell stocks using their mobile devices through a mobile application or via website.

Mr Mkama, who graced the launch, said the capital market authority approved the platform because it met both national and international requirements.

He said the new development augurs well for CMSA plans to steer to the growth of the stock markets .

“The platform will increase the number of participants in the market and thus push for more liquidity and growth,” he said.

He said selling and buying securities through mobile devices provide convenience by saving time and it would reach many people and potential investors especially those in remote areas.

He said: “There are many potential investors who live in upcountry regions, who are interested in the DSE activities, but they cannot access services. This is because many brokerage firms do not have office branches in all regions.

“However, this platform is a boon for them and the DSE because they will now simply be able to access the market.”

Speaking yesterday, DSE chief executive officer Moremi Marwa said the platform will be operating as an “order management system” allowing investors to check on the market and make an order anywhere they are. “We also designed this platform as a means to expand our investors base.

“Currently, we only have 550, 000 registered participants in the market which is only nearly one percent of the total Tanzanian population,” said Mr Marwa.

He said the platform also aligns with the implementation of the DSE five-year strategic plan for 2018-2022.

Being the third year of the strategic plan implementation, Mr Marwa said it is very difficult to project the exact number of participants that will come in as a result of this initiative.

However, DSE has plans to put in place a number of supporting resources such as engaging in public awareness programmes and continuing with efforts in profiling the bourse and its visibility so as to make the numbers grow.

Regarding the role of brokers in this mobile platform, Mr Marwa said they have included all the registered brokers, and a trader will have a chance to choose according to his or her preference.

“When you log in to the platform a trader will be directed to the list of brokers of which to choose from,” he said.

This will also help a trader when he/she faces any challenge in investing such delayed dividend or at any inconveniences you would know whom to ask,” says Marwa.

In the East African region, the Nairobi Securities Exchange (NSE), also launched a mobile application this year aimed at enhancing investors’ participation in Kenya capital market.

Studies have also shown that users on mobile devices might trade more frequently and impulsively, and in turn may perform less well than traders pursuing a more rigid buy-and-hold strategy.

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East Africa: Regional Stock Markets Automate Trading

Four East African countries – Rwanda, Uganda, Tanzania, and Burundi – have finally merged their stock markets through a decade-long automation project to attract investment.

The automation means now investors will be allowed to trade their stocks electronically across the borders next month, according to Celestin Rwabukumba, the chief executive of the Rwanda Stock Exchange.

It is a project that has been in the making since 2011 when countries from the region embarked on integrating their stock exchanges, although at a time Rwanda was only starting to invest in its capital market.

The World Bank-funded project has been completed with only a few states for the technology system to go live, according to Rwabukumba who’s also the chairman of the East Africa Securities Exchange Association (EASEA).

“There was a time for you to trade your KCB shares in our market, you needed to go on a bus, get your shares certificate from Kenya and bring it to Rwanda or send it by DHL,” he said.

That was inefficient and costly.

“Today, it’s going to be happening in the blink of an eye. The system will allow you to open an account across markets, boost access to a pool of investments, as well as give you visibility,” he noted.

Through the platform, investors in the four countries will be able to buy and sell shares of companies listed in any of the countries without going through different stakeholders.

Kenya had reportedly pulled out of the project in 2015 over alleged procurement irregularities, but Rwabukumba said they have “formally expressed interest” to join again.

Kenya currently has the largest and active capital market in the region.

The Nairobi Securities Exchange comprises approximately 66 listed companies with a daily trading volume of more than $10 million and a total market capitalization of more than $20 billion.

Rwanda’s bourse, on the other hand, has a market capitalization of just $3.5 billion, but the move by the region is expected to diversify markets such as that of Rwanda and create a wide pool of both retail and institutional investors.

George Odhiambo, the Managing Director of KCB Bank Rwanda, part of KCB Group whose shares are listed both in Kenya and Rwanda, said the automation is likely to bring a lot of benefits towards promoting the capital market.

“Any automation should reduce transaction costs, improve operational efficiencies and speed deals closure for the benefit of stakeholders,” he told The New Times on Thursday.

The platform

The technology platform dubbed the EAC Capital Markets Infrastructure (CMI), developed by a Pakistan-based private firm, will basically interconnect all the region’s trading systems.

It has features such as the smart order router, which will enable stockbrokers to view all markets and market information across the region, and the messaging feature that will allow market players to communicate.

However, for stockbrokers to trade, they will have to fulfil certain conditions including minimum capital requirements. For instance, a regional broker to be allowed to trade across the region will have to be capitalized at Rwf240 million.

Alternatively, for brokers to trade they would have to have “sponsored membership” in a local market where they want to buy stocks.

“It means you will have to sign an agreement with a broker in Dar es Salaam through which you can execute orders. This is because stock markets are still governed by regulations in host markets,” he noted.

Rwanda, which is looking to leverage the integration project to promote its capital market, started its bourse officially in 2011.

Other members in the region have had their stock exchanges for many years, except Burundi which is yet to establish one.

The joint stock market in East Africa follows in the steps of a similar regional effort in West Africa where Bourse Régionale des Valeurs Mobilières already exists.

The Abidjan-based electronic exchange which lists 45 companies is common to the eight-member states of the West African Economic and Monetary Union – Benin, Burkina Faso, Guinea Bissau, Côte d’Ivoire, Mali, Niger, Senegal, and Togo.

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Zimbabwe: Delistings – Bigger Crisis in the Offing

THIS year has been one of the most eventful on Zimbabwe’s fragile capital markets.What with the government’s unpresented crackdown on three big ZSE counters with fungible stocks.

These were accused of undermining efforts to fight an inflationary scourge and terrifying price hikes.

At the time of the unprecedented onslaught on business in June, emotions were running high, and President Emmerson Mnangagwa’s government chose to shut down the entire ZSE to deal with Old Mutual, PPC and SeedCo International.

In the end, the economy lost ZW$240 billion (about US$3 billion) during five weeks of resentment and madness on the ZSE, even as the government intensified its hyped “Open for Business” campaign.

The government’s heavy handedness was shocking.

Investors queried the government’s seriousness about its “Open for Business” mantra if influential counters were openly resented and harassed.

The battering that the ZSE suffered in October confirmed the market’s verdict – Zimbabwe remains the most difficult market to trust.

This should have worried the government. But judging by the way it responded, nobody cared.

Farms have since been invaded and taken by force, for instance. For that, Zimbabwe has been punished. We wonder if the ZSE will attract new investment portfolio funds, and if companies still have the appetite to list under the circumstances. By harassing big investors, the government messed up.

Old Mutual and PPC are not penny stocks that we can push around without repercussions. This is why there has been a spate of delistings on the ZSE. It means the ZSE is on course for another dismal year of delistings. At least five companies have dropped from the ZSE this year, or are in the process of doing so, which sends bad signals to the investment community and soils the country’s image. The authorities are aware of this, but are too defiant to solve it because many a time those in high office have benefited from Zimbabwe’s crisis.

Last week, Powerspeed said it was exiting the ZSE, adding its name to a list of firms including Falgold, Dawn Properties, ZimRe Property Investments and SeedCo International that have exited or are in the process of leaving.

We can trace these delistings back to 2011 when august firms like TA Holdings Limited and CAPS Holdings Limited, the pharmaceutical outfit, Cambria, Chemco, Interfin Holdings, ABC Holdings, Cairns Holdings, Apex Corporation Limited, Tractive Power Holdings, Gulliver Consolidated Limited, Steelnet Limited, Lifestyle Holdings Limited and Trust Holdings Limited went the same way. Very little or no action has been taken to rectify the situation.

What we have witnessed on the ZSE must be a cause for concern.

The image of the ZSE determines how an economy is viewed elsewhere. Turmoil in the capital markets paints a bad image about a country’s investment climate. A stable and well-functioning ZSE builds up confidence among investors.

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Nigeria: NSE All-Share Index Rises 0.65% As Stock Market Rebounds

The stock market rebounded yesterday which made the Nigerian Stock Exchange (NSE) All-Share Index (ASI) to rise by 0.65 per cent to close at 34,340.56, after a negative start on Monday.

The market had depreciated the previous day following continued profit taking that depressed the prices of 46 stocks as against five that appreciated.

However, the trend was reversed yesterday as 26 stocks appreciated compared with 16 others depreciated. United Capital Plc led the price gainers with 9.5 per cent, trailed by Fidelity Bank Plc with 9.4 per cent. Mutual Benefits Assurance Plc chalked up 8.7 per cent, just as Cornerstone Insurance Plc and Union Diagnostic and Clinical Services Plc garnered 8.6 per cent and 8.0 per respectively.

Sterling Bank Plc and Union Bank of Nigeria Plc went up by 7.6 per cent and 7.2 per cent in that order. Both banks were among those that released their nine months last week.

For instance, Union Bank of Nigeria Plc recorded gross earnings of N118.8 billion in 2020, indicating a six per cent growth from N111.9 billion posted in the corresponding period of 2019. Profit before tax rose two per cent from N15.5 billion to N15.9 billion in 2019.

Commenting on the results, Chief Executive Officer of Union Bank, Emeka Emuwa, had said notwithstanding the realities of a tougher operating environment arising from the ripple effects of the Covid-19 pandemic, the bank delivered a six per cent growth in gross earnings from N111.9 billion in nine months to N118.8 billion in nine months 2020..

According to him, the bank reached a major milestone as our customer deposits crossed the N1 trillion mark this quarter, growing by 28 per cent to N1.1 trillion compared to N886.3 billion at the end of 2019. “This reflects increasing customer loyalty and our intense retail drive. Our customer acquisition strategy has been reinforced by the versatility of our digital platforms and channels which continue to drive customer satisfaction,” he said.

Meanwhile, Eterna Plc led the price losers with 9.9 per cent, trailed by Fidson Healthcare Plc with 9.8 per cent. Champion Breweries Plc shed 9.4 per cent. Julius Berger Nigeria Plc went down by 8.9 per cent, just as Chams Plc and Livestock Feeds Plc lost 8.3 per cent and 5.5 per cent in that order.

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Uganda: Austerity Slows Deals at Ugandan Bourse

The total market capitalisation of firms listed at the Uganda Securities Exchange fell to Ush4.27 trillion ($1.15 billion) in 2019/20, from Ush4.91 trillion ($1.32 billion) in 2018/19.

According to Capital Markets Authority report, the drop was driven by substantial declines in share prices of locally listed companies, a trend that was escalated by the Covid-19 outbreak.

Cost-cutting and a fast growing digital wave to containing spread of Covid-19 currently sweeping through many sectors are also weighing down on the capital markets.

Data indicates that share prices of Uganda Clays Ltd, Cipla Quality Chemicals Industries Ltd, NIC Holdings Ltd and Stanbic Holdings Ltd fell by 40.55 per cent, 37.5 per cent, 30.77 per cent and 17.24 per cent respectively, between July 2019 and June 2020.

Consequently, the USE’s All Share Index declined from 1,614.82 points in 2018/19 to 1,369.84 points in 2019/20, the recent data shows.

The capital markets industry’s consolidated profit after tax dropped to Ush1.2 billion ($322,939) in 2019/20, from Ush1.6 billion ($430,585) in 2018/19. Total costs incurred by capital markets industry players rose to Ush14.5 billion ($3.9 million) in 2019/20 from Ush13.7 billion ($3.69 million) in 2018/19.

In contrast, total assets held by Collective Investment Schemes (CIS) also referred to as unit trust funds grew to Ush388.5 billion ($104.6 million) in 2019/20, from Ush173.5 billion ($46.7 million) in 2018/19. Total revenues generated by capital markets industry players increased to Ush16.4 billion ($4.4 million) in 2019/20, from Ush14.2 billion ($3.8 million) in 2018/19 the report says.

Fund managers accounted for 43 per cent of overall industry revenue followed by stockbrokers and dealers with a 38 per cent share. The USE registered an 18 per cent share of total industry revenues while investment advisors recorded a share of 0.8 per cent during the period under review.

“Going digital in the Covid-19 era has helped us cut electricity bills and office printing costs. Though we still come to office, most of our meetings are held virtually needing less printed documents. Some services have been outsourced to the Nairobi office reduced the workload on our side. We have digitised almost 90 per cent of our operations to date, but the idea of shared work platform that interconnects us and our service providers is not feasible because some players have divergent digitisation benchmarks in their systems. We have experienced less austerity pressures during lockdown because we run a lean operation,” said Mubbale Kabandamawa Mugalya, Investment Manager at Sanlam Investments East Africa Ltd, a pension scheme and unit trust fund manager.

“Equity markets are likely to come under pressure from muted participation by domestic and offshore investors due to the economic uncertainty generated by the Covid-19 pandemic,” he added.

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Zimbabwe: Powerspeed in Shock ZSE Exit

Powerspeed  Limited is exiting the Zimbabwe Stock Exchange (ZSE) due to limited capacity to unlock capital, lack of realistic valuation representation, and high compliance costs among other issues.

The leading supplier of electrical, hardware and home improvement products announced the move in a recent circular.

In the circular to shareholders issued last week, the company’s board said it was of the view that in the current environment in Zimbabwe, a listing on the Zimbabwe Stock Exchange has very little benefit but had considerable costs.

“Powerspeed is a very illiquid stock and trading often does not represent a realistic valuation,” the circular reads.

“The lack of capital from institutional investors means that the listing has limited value in terms of a mechanism to raise capital and ongoing legal, compliance, and audit costs are an impediment to shareholder returns.”

The company announced that in the face of a difficult trading environment, the additional costs of being listed with no compensating benefits can no longer be borne.

Resultantly, Powerspeed has proposed to shareholders it’s delisting from the ZSE and at the same time, the ZSE has directed the company to provide a mechanism to shareholders wishing to exit their shareholding prior to the delisting.

“The coming into effect of the proposed delisting will be subject to the approval of the proposed delisting by a majority in number representing three-fourths by percentage (75%) of the shareholding of Powerspeed, present and voting either in person or by duly authorised proxy at the Extraordinary General Meeting to be held at the date,” said the circular.

The latest development comes at a time when several companies have indicated the intention to leave the ZSE for varied reasons.

Falgold has scheduled an extraordinary general meeting where it will seek shareholder approval to terminate its ZSE listing.

Dawn Properties is also set to de-list from the bourse after African Sun Limited made an offer to acquire 100% shares in the company.

ZimRe Properties will also be de-listed given that ZimRe Holdings Limited (ZHL) is seeking to acquire the entire shareholding of Zimbabwe Property Investments and make a simultaneous application for de-listing,

Market watchers have also criticised the government’s interference in the running of ZSE following the closure of the commodities market in June this year as one of the key stumbling blocks bedeviling the market.

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Nigeria: Stock Market Declines 2.5% On Profit Taking

The stock market declined by 2.5 per cent last week following profit taking after weeks of sustained growth. The market, which spiked by 12.9 per cent the previous week, closed lower last week as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) shedding 2.5 per cent to be at 34,136.82. The market capitalisation closed lower at N17.838 trillion.

Despite the decline, analysts at Cordros Research said in the short to medium term, they still see scope for expansion in valuation multiples as the depressed yield environment remains compelling for yield-seeking investors to rebalance their portfolio towards equities.

“In the week ahead((this week), we expect a mixed market performance due to continued profit-taking activities and positioning by early birds in dividend-paying stocks ahead of full year (FY) 2020 dividend declarations. We reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings,” the analysts said.

Meanwhile, investors traded 11.4 billion shares worth N35.892 billion in 39,265 deals compared with 4.509 billion shares valued at N58.733 billion that exchanged hands in 47,140 deals the previous week. The Construction/Real Estate industry led the activity chart with 8.529 billion shares valued at N6.055 billion traded in 438 deals, thus contributing 74.8 per cent and 16.8 per cent to the total equity turnover volume and value respectively.

The Financial Services Industry followed with 1.991 billion shares worth N19.933 billion in 21,725 deals, just as the Conglomerates Industry occupied the third position with a turnover of 423.702 million shares worth N526.698 million in 1,962 deals. Trading in the top three equities namely UAC- Property Development Company Plc, Transnational Corporation of Nigeria Plc and Jaiz Bank Plc accounted for 9.259 billion shares worth N6.639 billion in 1,958 deals.

The price movement, showed that 55 equities depreciated in price, higher than 12 equities in the previous week, while 21 equities appreciated in price during the week, lower than 69 equities in the previous week.

Coronation Insurance Plc led the price losers with 21.1 per cent, trailed by Oando Plc with 19.7 per cent. Japaul shed 18.1 per cent, just as Transcorp Plc went down by 13.0 per cent. FBN Holdings Plc and Sterling Bank Plc depreciated by 12.1 per cent and 11.9 per cent respectively.

Other top price losers: Nigerian Aviation Handling Company Plc (11.5 per cent); Fidelity Bank Plc, FCMB Group Plc (11.4 per cent apiece); and Union Bank of Nigeria Plc (11.2 per cent).

On other hand, BOC Gases Plc led the price gainers with 39.8 per cent, trailed by Tripple Gee & Company Plc with 19.5 per cent. NEM Insurance Plc chalked up 17.2 per cent. AIICO Insurance Plc gained 12.2 per cent, just as Ikeja Hotel Plc and Linkage Assurance Plc went up by 10 per cent apiece.

Other top price losers included: Conoil Plc (9.4 per cent); UPDC Real Estate Investment Trust (9.2 per cent), Cornerstone Insurance Plc (6.9 per cent) and Champion Breweries Plc (6.0 per cent).

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Egypt: Egypt Urges Zim Companies to Engage Global Business Community

ZIMBABWEAN companies must engage the international community and create relations that foster economic growth, the Egyptian Ambassador to Zimbabwe Mahmoud Amer has said.

In a television interview on the NewZimbabwe.com Business Brief programme Wednesday, Ambassador Amer said the southern African country had a lot of economic potential and it had to take advantage of by engaging other nations across the globe for businesses to grow.

“My advice to the business community in Zimbabwe is to go out and speak to other countries in terms of business. I know there are some sort of syndicates where business people come together under one umbrella and vigorously market at an international level,” Ambassador Amer said.

“Zimbabwe has a lot of potential especially in areas such as health, tourism, and agriculture. People should be more on the outward look rather than the inward look. Companies in Zimbabwe must try to bring in the attention of the international community to showcase what they do.”

The top diplomat also noted the good economic relations between Zimbabwe and Egypt adding they must be enhanced for the benefit of the two countries.

“A lot should be done and can be done to foster good economic relations between Zimbabwe and Egypt. The existing political relations should be expanded and developed into economic magnificence,” he added.

“My colleague ambassador of Zimbabwe in Cairo has the same directives so we are working hand-in-hand to foster economic relations in order to bring them to par so that Zimbabwe and Egypt happily exist.

“Before coming to Zimbabwe, I had a bit of homework to do and I went around to the Egyptian business community and I saw they are very enthusiastic about economic opportunities that Zimbabwe can offer and with the Second Republic here, which says ‘everyone is open for business’, I think the Egyptian companies will take an opportunity and would come here,” said Ambassador Amer.

He said he was working tirelessly to make sure Egyptian companies fulfill their promises and invest in Zimbabwe.

“This is my everyday work to make sure that Egyptian companies know what Zimbabwe offers and there is a lot of room where we can expand our bilateral economic relations specifically in the fields of agriculture, tourism, and health.”

Turning to sanctions imposed against Zimbabwe by the West, Ambassador Amer said Egypt is a member of the African Union (AU) and was fighting to have the restrictive measures removed for Zimbabwe’s economy to grow.