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Brvm Stock Market 2015 Year in Review BRVM Stock Market 1 February 2015 BRVM STOCK MARKET 2015 YEAR IN REVIEW Cheikh Yakhoub Niang, CFA Tel: (+221) 33-869-3140 [email protected] BRVM, the African Leader in 2015 In a year full of difficulties and general disappointment, the West African stock market posted the best yearly performance of the continent at 17.7%. Over 2014 and 2015, the regional market two main indices, the BRVM 10 and the BRVM Composite, experienced cumulative increases of respectively 59% and 83%. Performing as well as the Côte d’Ivoire economy, all but one sector of the BRVM market displayed positive performances during 2015. Overall, it was a good year for the BRVM investors that enjoyed a significantly higher trading volume, with a far greater contribution of smaller cap stocks. Another Bullish Year Ahead Globally, the consensus is expecting another difficult year with low oil and commodities prices among other down trends. However, things are likely to stabilize towards the end of 2016. The BRVM should be able to benefit from its low correlation with other global markets and enjoy the expected growth in the WAEMU zone. Agriculture will still be enduring a down commodities market and make it hard for these companies to perform. 2015 Stock Performances UNXC; 257.5% BNBC; 142.5% PRSC; 139.6% ABJC; 118.5% ONTBF; 114.3% TTLC; 109.5% NTLC; -9.1% SOGC; -19.7% SVOC; -25.5% PALC; -29.0% UNLC; -32.4% SPHC; -34.6% Source: BRVM Data BRVM 2015 Year in Review | 1 TABLE OF CONTENTS GLOSSARY ......................................................................... 3 WHAT HAPPENED ON THE BRVM MARKET DURING 2015 .. 4 Recent Bond Issues ......................................................................... 6 IPO’s and Capital Raise ................................................................... 6 New Development Plan & New Logo .............................................. 6 BRVM STOCK EXCHANGE, THE 2015 AFRICAN CHAMPION . 8 SECTOR AND STOCK RETURNS .......................................... 12 Industry sector 8,1% (2014: 9,3%; 2013: 55,7%; 2012: 22,1%) .... 15 Public Services sector 16,0% (2014: 15,7%; 2013: 33,9%; 2012: 24,5%) .......................................................................................... 16 Finance sector 13,9% (2014: 13,9%; 2013: 43,1%; 2012: 10,7%) 17 Transport sector 25,7% (2014: 53,8%; 2013: 126,2%; 2012: 45,9%)18 Agriculture sector -27,7% (2014: -35,4% 2013: -6,5%; 2012: 8,3%)18 Distribution sector 95,1% (2014: 10,4%; 2013: 52,6%; 2012: 65,8%) ..................................................................................................... 19 CONCLUSION & 2016 OUTLOOKS ..................................... 20 SUMMARY OF BRVM RETURNS ........................................ 23 Disclosures Appendix This report is distributed by First Frontier Capital Limited (“FFCL”) in association with Impaxis Securities (“Impaxis”). This report is classified as being a “marketing communication” for the purposes of the rules and guidance (FCA Rules) issued by The Financial Conduct Authority (FCA). This is principally because FFCL cannot verify that this report has been prepared in accordance with UK legal requirements designed to promote the independence of investment research. This report has been prepared by the research division of Impaxis and has been reviewed by FFCL, but no material changes have been made as a result. First Frontier Capital Limited is an Appointed Representative of Dinosaur Merchant Bank Limited, which is authorized and regulated by The Financial Conduct Authority, UK. BRVM 2015 Year Review | 2 GLOSSARY Stock Code Company Name Sector ABJC Servair Abidjan CI Distribution BICC BICI CI Finance BNBC Bernabé CI Distribution BOAB Bank of Africa Bénin Finance BOABF Bank of Africa Burkina Faso Finance BOAC Bank of Africa Côte d'Ivoire Finance BOAN Bank of Africa Niger Finance BOAS Bank of Africa Sénégal Finance CABC SICABLE CI Industry CFAC CFAO CI Distribution CIEC CIE CI Public Services ETIT Ecobank TG Finance FTSC Filtisac CI Industry NEIC NEI-CEDA CI Industry NTLC Nestlé CI Industry ONTBF Onatel BF Public Services PALC PALM CI Agriculture PRSC Tractafric CI Distribution SAFC SAFCA CI Finance SDCC SODE CI Public Services SDSC Bolloré Logistics CI Transport SEMC Crown Siem CI Industry SGBC SGB CI Finance SHEC Vivo Energy CI Distribution SICC SICOR CI Agriculture SIVC Air Liquide CI Industry SLBC Solibra CI Industry SMBC SMB CI Industry SNTS Sonatel SN Public Services SOGC SOGC CI Agriculture SPHC SAPH CI Agriculture STBC SITAB CI Industry SVOC MOVIS CI Transport TTLC Total CI Distribution TTLS Total SN Distribution TTRC Trituraf CI Industry UNLC Unilever CI Industry UNXC Uniwax CI Industry BRVM 2015 Year Review | GLOSSARY 3 WHAT HAPPENED ON THE BRVM MARKET DURING 2015 The BRVM Stock Exchange is in the WAEMU zone that includes 8 West African countries: Benin (1 company listed), Burkina Faso (2), Côte d’Ivoire (31), Guinea Bissau (0), Mali (0), Niger (1), Senegal (3) and Togo (1). Overall, the WAEMU region, home of the BRVM, experienced a strong growth in 2014, led by the continued economic expansion in Côte d’Ivoire, and limited impact of the consumer prices and underlying inflations. We also note that the rise in public infrastructure investment also stimulated economic activity. Fortunately, the impact of the virus Ebola epidemic (particularly in Guinea, Liberia and Sierra Leone) on growth has not been impactful in the WAEMU. The security and political situation in many countries do remain fragile, although the presidential elections went well in Côte d’Ivoire and Burkina Faso at the end of the year. Elsewhere, we note that the situation is still fragile in the North of Mali, with a terrorist attack in the capital of the country, Bamako, in last November. There was also a terrorist attack in Ouagadougou, capital of Burkina Faso on January 15th 2016, with a death toll of 30 victims. Let’s dig deeper into the two main countries of the WAEMU zone and the ones with the most companies listed, even though Sénégal is a very distant number two to Côte d’Ivoire. In Sénégal, originally planned at 4.9% in 2014, the growth rate was revised down to 4.5% due to the negative impact of Ebola disease in the tourism sector and delayed rains on the agricultural sector growth. GDP growth is projected at 4.6% in 2015, driven by the revival of the primary sector and the strength of activity in the secondary and tertiary sectors. This momentum, coupled with the beginning of implementation of the Plan Senegal Emergent (PSE), should continue and growth is projected to be at 5.0% in 2016. The PSE plans to make Senegal an emerging economy by 2035. In its first implementation period (2014-18), the PSE is structured around three areas: i) structural transformation of the economy and growth; ii) human capital, social protection and sustainable development; iii) governance, institutions, peace and security. The stated PSE’s ambition was to achieve, over this period, an average growth rate of 7%. The new development strategy should result in substantive structural reforms to raise growth potential and stimulate creativity and private initiative. This is primarily to meet the strong desire for well-being. BRVM 2015 Year Review | WHAT HAPPENED ON THE BRVM MARKET DURING 2015 4 The different projects include the sectors of energy, agriculture and tourism. Added to investment programs in the road sector, with further work of the highway and the airport, as well as those for opening up the South. The slowness with which these programs and reforms are applied, however, may negatively influence the growth projections. Household consumption is the main component of domestic demand, with a share of 77.5% of GDP in 2014. It increased by 3.2% in 2013 and 2014 is projected at 3.6% in 2015. It is also supported by the remittances of migrants, estimated at about 12.0% of GDP in 2014 by the International Monetary Fund. But, Senegal remains exposed to the security situation in Mali, home of a recent terrorist attack, and possible spread of the Ebola outbreak. Similar to recent years, Economic growth in Côte d’Ivoire is likely to remain strong in 2015 and 2016, with growth estimated at 7.9% and 8.5%, based on the same explanatory factors in 2014 according to the International Monetary Fund. This growth is supported by both domestic and external demand: Public and private investment in infrastructure and in household consumption supporting domestic demand; Foreign demand boosts his side's export commodities. Plus, the political situation improved slightly, with a slow pace of dialogue between political actors, despite some effective measures: release of proGbagbo prisoners, the return of high-level political refugees and the unfreezing of their assets in banks. From the supply side, the primary sector remains a key driver of growth, through investments in rural infrastructure, and reforms implemented to improve farmers’ earnings and other important projects for productivity. Private consumption remains a key factor of this growth, thanks to higher farm income, a low level of inflation, and a slight improvement in the formal and informal employment in urban centers. As for external demand, increases in exports in general and cocoa bean, seed cotton and rubber were on average slower than imports. These are composed mainly of capital goods and intermediate goods for post-conflict reconstruction. Moreover, the situation remains fragile in neighboring countries, especially those of the Mano River Union (MRU), Burkina Faso and Mali. The ADB GrouP recognizes three factors likely to reduce these risks: the will of the government, continued dialogue within the framework of national reconciliation, political and financial support of the entire international community to consolidate democracy and peace efforts in neighboring countries. BRVM 2015 Year Review | WHAT HAPPENED ON THE BRVM MARKET DURING 2015 5 Recent Bond Issues The West African Economic and Monetary Union (WAEMU) recently set up a regional agency, UMOA Titres, to support the issuing and management of sovereign bonds. This is even more relevant given the fact that the USD will continue its rise in value in 2016.
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