21 Feb

Cash-Rich Pension Funds in Ghana Drive World-Beating Stock Gains

A flood of money from private pension funds has driven a 33 percent surge in Ghana’s benchmark stock index this year, giving the West African country the world’s best-performing equities.

The government in December transferred 3.1 billion cedis ($690 million) to the funds, money the state had held since 2012 while the industry put structures in place for new entrants.

Seven months earlier, Ghana doubled the proportion of assets that pension funds can invest in stocks to 20 percent.

“We are seeing more participation from local institutional investors, especially the pension funds,” said Sena Agbo, head of investment banking at SAS Finance Group, which runs the country’s second-best performing mutual fund. “The temporary pensions account now transferred to them is enabling them to increase their take of stocks.”

The value of stocks traded by local investors increased almost five-fold from a year earlier last month, according to the Accra-based Central Securities Depository Ltd.

As of Tuesday, the 36-member Ghana Stock Exchange Composite Index had risen more than the 95 other benchmarks tracked by Bloomberg in dollar terms since Jan. 1, boosted by a World Bank forecast that the economy will expand by 8.3 percent in 2018, the fastest pace on the continent.

“The economy is growing and a lot of incentives like tax cuts and utility price decreases are out there to make businesses competitive,” Sidney Koranteng, a stock trader at Databank Group in Accra, said by phone. “It shows we’re in a period of a boom. The market is not hot yet.”

Source: https://www.bloomberg.com/news/articles/2018-02-21/cash-rich-pension-funds-in-ghana-drive-world-beating-stock-gains

06 Feb

This Stock Is Proof of How Much Egyptians Love Their Cigarettes

If money talks, the relationship between Egyptians and their cigarettes won’t be changing anytime soon.

Shares of Cairo-based Eastern Tobacco, which holds a monopoly on cigarette production in Egypt, have hit successive record highs, in both dollar and local-currency terms, after the company posted an increase of almost 161 percent in first-half profit.

Eastern Tobacco has been on an upward trend since Egypt let its currency float freely in November 2016 and started implementing an economic reform program to end a dollar shortage and narrow its budget deficit.

Since then, the stock has surged 373 percent, compared with 6 percent for the MSCI World Tobacco Index and 70 percent for Egypt’s benchmark gauge.

“The increase in profits is mainly due to pricing,” said Khaled Sadek, head of consumer and healthcare research at CI Capital. “They raised their ex-factory prices by about 40 percent compared to last year and they still have a big part of their inventory of raw tobacco from before the currency float which makes the cost low for them and the margins higher.”

Eastern Tobacco’s revenue in the first half increased 36 percent to 6.8 billion Egyptian pounds ($384 million), and costs rose 23 percent.

While the volume of sales fell between 7 percent to 10 percent since the price of cigarettes climbed in November, Chairman Mohamed Haroon sees them starting to return to normal in March, he said in an interview last week.

Mounting Gains

The new currency regime sent inflation to record levels and diminished the spending power of most Egyptians, but it also spurred the return of investor confidence and foreign inflows into the nation’s assets.

The tobacco producer became one of the most popular names among equity investors; it gained the most among the 30 members of the country’s EGX 30 index after Egypt Aluminium.

“Historically, people don’t stop smoking,” said Ahmed Hafez, the co-head of research at HC Brokerage in Cairo. “What happens usually is that they cut the number of cigarettes they smoke per day, and then they usually divert to the normal habits again. But we haven’t seen a prolonged impact on demand since price increases.”

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