Commodity prices and commodity company stock prices in Africa in 2015

Dear Africa interested individuals:

                                                         Tea is a major foreign exchange earner for Kenya.  Kenya Tea prices have risen about 66% year-to-date.  How did the stock price of three of its listed tea companies fare so far this year?  Williamson Tea rose 35%, Kapchorua Tea rose 33% and Limuru Tea rose 41%.  The price of the Tea companies have risen but, below the price surge of the underlying commodity.  The overall market gloom in Kenya may have something to do with this.  The key is that both (commodity price & commodity company price) are in positive growth territory.  

Raw Tobacco prices in Zimbabwe have risen by about 1.5% so far in 2015 while, British American Tobacco, Zimbabwe has risen 4.46% year-to-date as at September 18th, 2015.  Both are on the same page in terms of direction though, the stock price is ahead  of the commodity price which is the reverse of the Kenya case.  

Zimbabwe is also a major exporter of Nickel.  Nickel prices have fallen by about 35% so far in 2015. Bindura Nickel Corporation's share price has declined by 75% so far in 2015.  Both moved in the same direction with the company stock price moving southward in a more aggressive fashion. 

Gold price has declined by about 6% so far in 2015.  Galane Gold of Botswana stock price has declined by 58% so far in 2015.  Anglo Gold Ashanti Ghana has an unchanged (0%) price performance in 2015.  Golden Star Resources has declined by 15% so far this year.  Two of three gold mining companies have declined in 2015 (just like the commodity) and one remains unchanged.  The two that have declined exceeded the decline in the underlying commodity.  

Namibia is a major exporter of Uranium.  Forsys Metals (a Canadian company) has 100% shareholding of a major mine in Namibia. Uranium prices have risen by about 6% in 2015 while the stock on the Toronto Stock Exchange has declined by about 12%.   This is the first case where the underlying commodity price and the company stock price have moved in opposite directions.  This is likely reflective of concerns with the company beyond the fortunes of the underlying commodity. 

South Africa is a major exporter of Platinum.  Platinum prices have declined by about 18% so far in 2015.  Impala Platinum's stock price has declined by about 39% so far in 2015 while Lonmin Platinum has declined by about 86% so far this year.  This is the worst deviation of a commodity and its companies while moving in the same direction.  There are particular events (strikes, lawsuits etc) that have impacted both companies this year beyond platinum's price decline and this is deeply reflected in the fortunes of the stock prices so far in 2015.  

Zambia is a major exporter of  Copper in Africa.  Copper prices have declined by about 15% so far in 2015.  ZCCM-IH's stock price has risen by 48% so far in 2015 on the Lusaka Stock Exchange.  The company's stock price has moved in the opposite and favorable direction in comparison to the underlying commodity.  Investors in Zambia apparently have a positive view of where the company is headed despite the decline in copper prices.  This scenario can be equated to a vote of confidence given by parliament to an embattled president of a country.  I do see this as an anomaly of sorts.

ZCCM-IH is also quoted on the NYSE-Euronext and has declined by 15.3% year-to-date as at September 18th, 2015 which is equally in line with the underlying commodity.  I used the NYSE Euronext quote for my reference and not the static price on the Lusaka Stock Exchange.  This is the closest movement between an underlying commodity price and its company stock and this happened on a developed market stock exchange.  This is definitely food for thought.     ZCCM stands for Zambia Consolidated Copper Mines.          

Cote D' Ivoire is a net exporter of Crude Palm Oil.  Palmci's (trading code PALC on the BRVM Exchange) stock price has declined by about 15% so far in 2015 while crude palm oil price has declined by about 22% over the same period.  Both have moved in the same direction with the company moving southward at a slower pace than the underlying commodity.  Kindly note that Nigeria produces more crude palm oil than Cote D' Ivoire but is a net importer.  

Brent Crude Oil price has declined by 17% year-to-date as at September 18th, 2015.  Tullow Oil Ghana's stock price has declined by 6% so far this year, while Seplat Nigeria's stock price has declined by 35% so far this year.  Tullow Oil's price has not only declined less than the underlying commodity, it has also declined less (about 50%) than the Ghana Stock Exchange Index.  Seplat has not only declined more than the underlying commodity in 2015, it has also declined more (about 200%) than the Nigerian Index.  My surface level view is that investors are more understanding of the operations of Tullow Oil in comparison to Seplat.  When you do not know and/or fully understand the operations of a company, you negatively discount its price to account for the higher level of uncertainty.  I guess it is time for Seplat to talk more in-depth and more often to investors.      

Out of fifteen commodity companies across nine commodities reviewed, only four commodity companies' stock prices have performed better than the underlying commodity price so far in 2015.  All companies are net exporters of the commodities.  They are:

1. Tullow Oil Ghana (Crude Oil)

2. Palmci Cote D' Ivoire (Crude Palm Oil)

3. Anglo Gold Ashanti Ghana (Gold)

4. British American Tobacco Zimbabwe (Tobacco)

Two are hard commodities and two are soft commodities and all four have foreign ownership stakes.  I guess no matter how scientific we get, we cannot take out sentiment and emotions from human beings.  In foreign ownership we apparently trust.  I guess you now know which type of commodity companies to potentially maintain positions in during commodity price slumps.    

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