THE FUND:

Tundra’s Mathias Althoff checking out the competition at a grocery store in Cairo.

The fund rose 5.6% in April better than the benchmark MSCI EFM Africa ex South Africa Net Total Return Index, which rose 4.6%. The Swedish Krona continues to depreciate vs USD and lost 4.1% during the month adding to the positive the SEK return in the fund.

The positive relative performance in April was mainly generated from overweights in Egypt and Nigeria. Our underweights in Morocco and Mauritius were the main negative contributors relative to the benchmark. On a sector level, the fund gained from our holdings in Consumer Discretionary and Industrials, while we lost on underweights in Consumer Staples and Materials. The rerating of one of our largest holdings, Egyptian GB Auto, continued with the stock rising 23% in April. The IPO of CI Capital attracted a lot of attention. It has a similar business (leasing) as the finance part of GB Auto that led to speculations of a possible spin off. CI Capital rose almost 30% on the first two days of trading.

In April, we increased our position in Credit Agricole, an Egyptian bank, as we believe the bank will benefit from lower interest rates and increased economic activity. The company reported an earnings growth of almost 30% for the first quarter of 2018 vs quarter 1 of 2017 (which was a very difficult quarter coming right after the devaluation). The company is considered conservative and focuses more on credit quality and margins than market share. We see a further upside from today’s valuation of around 7x expected earnings and yielding 7%. (All changes in SEK).

MARKET:

The African markets performed better (+4.6%) compared to other Frontier Markets (+1.6%) in April. Zimbabwe was the best market in Africa (+33.7%) followed by Malawi (+12.2%). The worst performers were BRVM (a joint exchange for e.g. Senegal, Ivory Coast and Benin) (-1.9%) and Kenya (-1.7%). Egypt’s (+7%) market performance was helped by a number of strong reports from companies representing all sectors, among them dairy producer Juhayna rose 26% on the back of strong numbers. Inflation continued to fall (11.6% in March from 11.9% in February) supporting further rate cuts later this year.

Nigeria’s (+9%) confidence got a boost with increasing focus on higher oil prices and their positive effects on the Nigerian economy. First quarter results from the banks also helped as the positive earnings trend from 2017 continued. In Ghana (+6.3) banks witnessed an increase in appetite, as the market believes that strong performers will become stronger still as a result of new capital reserve ratios being implemented at the end of the year.

Kenya (-1.7%) went against the tide and saw heavy selling in, among others, index heavy weight Safaricom (where the fund has no holding) as investors took profits ahead of results with valuations looking rich compared to growth outlook.

DISCLAIMER:
Capital invested in a fund may either increase or decrease in value and it is not certain that you will be able to recover all of your investment. Historical return is no guarantee of future return. The Full Prospectus, KIID etc. are available on our homepage. You can also contact us to receive the documents free of charge. Please contact us if you require any further information: +46 8-5511 4570.