The Omicron variant of the Covid-19 virus, which spread from South Africa to the world last month, dealt a major blow to that country’s stock market. Another came from the high inflation rates in the US and Europe. As a result, the MSCI South Africa index dropped to 1375 points on 26 November from 1479 points on 16 November – a decline of 7%. By 7 December, however, the index had recovered to 1476 points and ended last week at 1454 points. This net 2% decline in the MSCI South Africa is not that steep when it is compared with those of major indices since 16 November. The S&P 500 Index and the FTSE 100 have each shed 2% and the Euro Stoxx 50 is down 5%. The South African stock market has thus shown great resilience since Omicron emerged. This is an encouraging sign, as it reflects that domestic investors are compensating for the loss of international investors.
The Johannesburg Stock Exchange (JSE) is continuing to reform its business. After entering into a close partnership with the Singapore Stock Exchange (SGX) – an event we reported on 29 November - the JSE is opening itself up to companies that are not listed. To this end, it has created the subsidiary JSE Private Placements (JPP). JPP will offer non-listed companies the opportunity to raise debt or equity via an automated platform that connects them directly with investors. “With JPP, we are building a future-fit capital market,” JSE CEO Leila Fourie said in a statement from the bourse.
We are delighted over the news. This is because the JSE initiative should make private fund raisings more transparent and efficient. That said, we would prefer it if more African companies decided to do an all-out IPO on the JSE. For such a move would mean more transparency within a regulated framework as well as liquidity. In the meantime, we hope that the JSE’s initiative will close the gap between non-transparent private fund raisings and a formal IPO.
Shareholders in Egyptian Media Production City (ISIN: EGS78021C010) are currently profiting from a recovery in that stock. In roughly the last four weeks, the share price is up 37% to EGP 6.08 (EUR 0.34). This compares with EGP 4.40 on 23 November. Shareholders are probably now hoping that Egyptian Media’s stock returns to the level seen in late January to early February, which was between EGP 7.80 and EGP 8.20 a share.
The company runs an entertainment complex near Cairo covering an area of about 35 million square meters. The complex includes the “Pharaonic City,” the “Islamic Village,” a “Magic Land” for kids, an underwater film shooting area as well as other sites for TV and movie productions.
Egyptian Media’s recovery followed strong results for the first nine months of the current financial year. On 4 November, the company said its profit for the period totaled EGP 95.5 million (EUR 5.4 million), or more than four times the EGP 23.5 million earned in the same period a year ago. Egyptian Media’s year-on-year sales were also up 25% to EGP 375 million (EUR 21 million). We applaud the company’s success and wish that the Egyptian government sees the stock’s recovery as a chance to reduce its 73.6% stake in it. This, in turn, would increase Egyptian Media’s free float and make it even more attractive for investors.
Spenn Technology (ISIN: DK0060827269) is a Danish fintech that listed on the “First North Growth Market” in Copenhagen in mid-January 2018. According to its website, the banking app provider aims to create in Africa “an inclusive financial ecosystem that will unite the unbanked with the banked.” Its mission has far from convinced investors, however. Several days after its IPO, Spenn’s share price hit an all-time-high of DKK 16.87 (EUR 2.27). But by October 2019, Spenn was reduced to a penny stock, trading at below DKK 1.00 a share. Although Spenn’s stock recovered somewhat last spring, rising to DKK 7.95 a share, it is now worth almost nothing at DKK 0.31 a share.
Many of Spenn’s investors are likely to have declared their investment dead. But the company may now have gotten a second chance. This is because someone with significant experience in African banking has been nominated to Spenn’s board, namely Petrus Johannes (Peet) van der Walt. By joining as a consultant in 2018 and later serving as its CEO, van der Walt engineered a successful restructure of Zambia’s Cavmont Bank. Cavmont Bank was ultimately sold to Access Bank Zambia (ISIN: NGACCESS0005 for the Nigerian owner Access Bank) on 31 January 2021. “Peet re-invented Cavmont from being a business-oriented bank to becoming a consumer-oriented bank which also included low-income communities,” said Spenn Chairman Karl-Anders Grønland in a company statement. That's pretty big advance praise. Van der Walt still has to prove that he can also succeed at Spenn. So far, the Danish fintech has only produced red ink, losing EUR 0.8 million in 2020 and EUR 1.2 million in 2019.