Strong foreign investor participation in 2013 pushed regional bourses to their best year that saw the stock markets set new performance records.

Most investors who put their money in the stock markets got handsome returns, especially at the Nairobi Securities Exchange (NSE), which closed the year as the best performing bourse in Africa and the fourth in the World, according to the MSCI index.

Data analysed by The EastAfrican indicates that investors showed a strong appetite for companies in the financial, manufacturing and investment sectors, a preference shown by the strong performance on counters in these segments.

READ: Share prices in regional bourses rise on foreign investor interest

So what were the best and worst performing counters in the four bourses and should investors hold or sell these shares in 2014?

Old Mutual Securities in a research note released on Friday picked 10 companies at the NSE which they believe will offer good value to investors in 2014.

The researchers picked three financials (Equity, Co-operative and National Bank), one utility company (Kenya Power), a manufacturer (EABL) as 2014 top picks. They also identified Kenya Reinsurance, Safaricom, KenolKobil, TransCentury and Centum as the top bets this year.

“With relatively stable macro-economic factors, the country as a whole is poised for growth. However, a smooth transition which began last year though the dispensation of the new devolved government will determine the stock market’s and the economy’s performance,” said Old Mutual.

In Uganda for example, cigarette maker BAT, Stanbic and Umeme led the pack, gaining 76 per cent, 32 per cent and 50 per cent respectively last year. In Kenya, Centum, Britam and Pan Africa Insurance rose 167 per cent, 145 per cent and 115 per cent respectively, making them the most lucrative counters at the NSE.

At the Dar es Salaam Securities Exchange (DSE), Tanzania Breweries Ltd (TBL) gained 167 per cent, Dar Commercial Bank (DCB) rose 110 per cent, while Tanzania Tea Packers Ltd gained 67 per cent.

Africa Barrick Gold (ABG) closed the year as worst loser, shedding 68 per cent of its value at the DSE.

The Rwanda Securities Exchange (RSE) closed the year as the best performing bourse in the region with its All-Share Index rising by over 130 per cent, rising from 100 basis points at the start of the year to close at 234 basis points, driven by a strong price rally from Bralirwa and Bank of Kigali, which rose to Rwf845 ($1.25) and Rwf239 ($35 cents) year on year from $26 cents and $5 cents respectively.

READ: Rwanda Securities Exchange performs best in the region

The Tanzania Share Index almost doubled, jumping 95 per to 2,839.680 last week from 1,455.52 in January 2013. The All Shares Index for the same market jumped 23 per cent over the same period from 1491.56 to 1835.050. The DSE saw its turnover rise from the average of Tsh50 billion (31.2 million) to Tsh250 billion ($156.2 million) — higher than the combined bourse’s total turnover for the past five years.

The NSE 20-share index gained 18.89 per cent since January, while the bourse’s All share index rose 41.18 per cent in the period. Based on its All Share Index, the NSE was in October rated third best in Africa, after Malawi and Ghana.

Analysts say the region’s bourses benefited from falling inflation which freed consumer spending, while the relative pick up of the global economy as well as the quantitative easing in the US also revived international capital flows.

The best performers

CENTUM up 167pc

The NSE company’s share price rose 167 per cent in the year driven by increased demand for the company’s shares following an announcement by Chris Kirubi — the company’s largest shareholder — that he would buy an additional 32.65 million shares in the company. This would push his ownership to 29.9 per cent from 24.99 per cent.

His decision raised demand for the company shares among short-term buyers as well as speculators and long-term investors.

Centum posted a 10.6 per cent growth in net earnings in the half-year ended September 2013, with net profit increasing to Ksh892 million ($10.2 million) in the period, compared to Ksh806 million ($9.26 million) a year earlier. Centum’s share price is expected to continue benefitting from positive news surrounding its investment projects.

For example, the Capital Market Authority (CMA) has awarded it a licence to operate as real estate investment trust managers, setting the stage for listing of building projects in the new year.

Centum announced last month that it would convert its multi-billion shilling real estate project in Runda known as Two Rivers into a development Reit (D-Reit), to attract investors.

The company has also placed a bid to buy off listed agriculture firm Rea Vipingo, with analysts speculating that Centum had an eye for the Vipingo’s land.

BRITAM up 145pc

The share price rose 145 per cent in the year on the back of improved earnings and a series of acquisitions that stroked investor appetite.

The company’s net earnings rose 28.7 per cent to Ksh2.1 billion ($23.1 million) in the six months to June, compared to Ksh1.6 billion ($18.3 million) a year earlier, helped by price gains in the company’s quoted securities.

The company’s holdings of stocks at the NSE more than doubled to Ksh2.3 billion ($26.4 million) from Ksh833 million ($9.57 million) in line with the double digit capital gains seen at the bourse.

This year, the performance of the NSE and the company’s continued acquisition spree — it has made a bid to buy 99 per cent of Real Insurance at an estimated cost of Ksh1 billion — as well as the company’s real estate projects will have a huge impact on its earnings and by extension its  share price.

PAN AFRICA INSURANCE up 115pc

The company’s share price rose by 115 per cent in the 12 months to December 2013.

The rally was driven partly by a decision by Sanlam, the South African financial service group, to increase its stake in the Kenyan insurer  from 50 per cent to  60 per cent from the open market, with the share purchases helping small investors to exit at a premium.

The South African firm used the share acquisition to gain control of the insurer’s strategic direction. The insurer’s net profit rose to Ksh800 million ($9.19 million) in the first half of 2013, compared with Ksh218 million ($2.5 million) in the same period in 2012.

In 2014, shrinking liquidity resulting from Sanlam’s increased stake as well as the expected income from the insurer’s property portfolio and interest from investment activities is expected to drive the share price.

Last year, the company bought a 3.59 per cent stake in Family Bank after participating in the lender’s December rights issue that raised Ksh1.2 billion.

The rights issue was priced at Ksh31 ($35.6 cents) per share, with Pan Africa investing Ksh310 million ($35.6 million) to buy 10 million shares in the lender, acquiring the minority stake.

TANGA CEMENT up 104pc

The DSE listed company’s share price defied negative sentiments around the cement maker’s profit drop to rise by 104 per cent in the year to December 2013.

The company’s earnings in the six months to June 2013 dropped by 48 per cent to Tsh10.5 billion ($6.25 million), compared to Tsh16 billion ($10 million) in a similar period in 2012, mainly a factor that the company blamed on illegal cement imports from Asia, and more specifically Pakistan.

Moving forward, the main challenge for the company will include the cheap illegal imports, cost of power, competition from capacity expansion by existing companies and entry of new rivals.

TANZANIA BREWERIES up 66pc

The company’s share price rose by 166 per cent in the 12 months to December, to join Centum as the region’s best performing counters.

The share price benefitted from a considerable foreign investor as well as institutional buying, with analysts saying the company share price was cheaper relative to EABL.

The DSE listed firm reported  a 7.9 per cent increase in profit after tax to Tsh86.75 billion ($53.8 million) in the six months ended September 2013, compared with Tsh80.37 billion ($43.7 million) in the six months ended September 2012.

Growth in earnings was achieved largely through increased sales volumes, improved efficiency as well as cost management while operating in a challenging environment.

The main challenge for TBL, however, remains the unpredictable spirit and beer taxation in the region, which could drive prices up and put pressure on consumption.

For example, last year Tanzania raised the exercise duty on beer by 25 per cent, while Uganda increased it by 10 per cent.

Worst performing companies

AFRICA BARRICK GOLD down 68pc

The year 2013 was not kind to ABG. The company, which is cross listed at the  London Securities Exchange and the Dar bourse, saw its share price tumble 68 per cent, reflecting subdued investor interest in the counter following a series of challenges faced by the gold miner. 

The company made a loss of $701.2 million in the first six months of last year, against a profit for the year-ago period of $73.7 million, after a lower gold price and a review of its lower grade mines forced it to take a $727 million revaluation charge.

The company faces other challenges like illegal mining, power generation problems and strikes. The DSE counter shed 34 per cent of its share price in 2013, as investors shied away from the company due to falling revenues and profits.

MUMIAS SUGAR down 34pc

The company made a net loss of Ksh1.67 billion ($19.19 million) in the year ending June 2013, compared to Ksh2 billion ($22.9 million) in the same period in 2012. In the period, revenues dropped 20 per cent to Kshh14.9 billion ($171.2 million) as the company ceded market share to imports and other millers.

The company has been struggling to repay loans and suppliers; with the government having to step in with a soft loan of Ksh500 million ($5.7 million) to enable it meet its obligation to farmers.

Moving ahead, the share price is expected to struggle especially as the country’s sugar market becomes open to imports from the Comesa region following the expiry of the 10-year market protection that Kenyan millers had enjoyed.

The expiry is expected to trigger mass sugar importation into Kenya, a market that the World Bank says is the second most lucrative for millers after the EU.

Mumias Sugar has gone to court opposing the move by the Kenya Sugar Board to grant licences to Africa Polysack Ltd, Busia Industries Ltd and West Kenya Sugar Company in what is seen as a move to protect its cane collection zone from competitors.

KENOLKOBIL down 25pc

The regional oil marketer’s share price lost 25 per cent of its value which was eroded by a failed take-over bid from Puma energy and poor performance by the company.

It made a profit of Ksh147 million ($1.68 million) in the first six months of 2013 compared with a loss of Ksh3.9 billion ($44.8 million) for the previous comparable period.

The company’s shares had rallied as speculators bought into the counter targeting to make a killing from the planned buyout, only for the sale to fall thorough.

The oil marketer has been trying to restore its debt as it seeks to retire expensive funding.

Last week, it issued a Ksh1.7 billion ($19.5 million) commercial paper, proceeds from which were used to retire some loans. The company has also indicated it will sell some of its non-core assets.