Weekly Market Analysis

Markets weakened further. The icy week saw a mere 62,024,600 shares traded as compared to the previous week’s 103,945,000 (-40.3%). Weekly turnover dropped by 33.4% to KES 1.6 billion compared to the previous week’s KES 2.4 billion. The main indices continued the downward trend. The NSE 20 slipped to 3693.22 (-1.55%), the broad NASI stepped down to 160.71 (-0.92%) and the NSE 25 also followed its peers, breaking off 59.64 points to rest at 4212.63 (-1.40%).

On the closing day of the trading week, foreign investor participation stood at 65% compared to its predecessor’s 75.7%, accounting for 65.8% of total buying and 64.3% of total selling. Foreign investor participation is mostly high in a buyer’s market.

The taciturn markets are experiencing a lot of range-bound trading; bored investors keep off our bourse and move to greener pastures such as other frontier markets, the powerful western markets and forex and commodities trading.

The Opposition protests have veritably rocked the Country. Scheduled for Moandays and Frydays, business community members have started dreading these weekdays. The picketers are now planning to include a midweek session in the forthcoming weeks. On Friday the 6th of October 2017, these demonstrations turned into riots in the Opposition leader’s hometown of Kisumu. A number of supermarkets and restaurants were looted and water pipes feeding some of the key areas of the city were vandalised. This left many bystanders wondering of what benefit would deliberately sabotaging one’s own water supply benefit oneself to further one’s political demands?

Both the parties expecting to contest the October 26th 2017 repeat Presidential election have adopted a hard stance. The incumbent party’s lawmakers have decided to change the election laws similarly to changing the rules of the game at half time, while the Opposition has not just vowed to boycott the election, but also disrupt it if the electoral body officials accused of bungling the August 8th elections do not step down and the incumbent party’s leaders don’t shelve the proposed electoral law changes. Yes, you read right. The Opposition candidate’s running mate has implied that the coalition is willing to reduce the demands underlying its ‘No reforms, no elections’ campaign to only two, as mentioned.

Telecommunications Sector

Safaricom Kshs. 24.75 (0.00%) remained unchanged with teleportation of 25,226,900 shares, representing almost 41% of all shares traded during the week. The Director of Public Prosecution has assembled a team to investigate six employees of the telecommunications giant for alleged meddling with the annulled August 8th elections. CEO Bob Collymore has vowed to hold the propagandists spewing the unfounded allegations personally viable if anything happens to his staff. He also vowed to continue providing services to the independent electoral body of the nation, refusing to be intimidated by threats from the Opposition.

The stock market behemoth dismissed 52 employees in the fiscal year 2016/2017 for carrying out fraud, an increase from the 16 employees it sacked in the year ended 30th March 2016.

The monopoly corporation’s market share has hit 80.4 % as at 30th June 2017, up from 75.7% in the previous period.

Banking Sector

KCB Kshs. 40 (-2.44%) saw new buyers served 7,095,800 shares while Equity Bank Kshs. 37 (-4.52%) traded 5,886,100 shares.

Co-operative Bank Kshs. 16.65 (-2.35%) moved 1,608,900 shares. The tier one banking counter hit a freak high of Kshs. 18 in intraday trade, towards the end of the week. This was a very small movement of shares and I suspect it was a retail investor succumbing to an exorbitant ask or another player in the stock market trying to stabilise the price. If it was the latter, they were not successful. However, a target of Kshs. 18 is a good upgrade from a target of Kshs. 17.50 just like a vacation out of the country is a good upgrade once domestic tourist destinations have been exhausted.

Moody’s Investors Service has placed the B1 long-term issuer rating of the Government of Kenya on review for downgrade, citing an increasingly heavier appetite for borrowing, liquidity concerns and burgeoning political pressures. Consequently, it has placed the ratings of Kenya’s top three lenders (KCB Bank, Equity Bank and Co-operative Bank) on review for possible downgrade, citing a potential deterioration of the Kenyan government’s credit profile.  “The top three banks’ sovereign bond exposures average around 1.4x of their tangible common equity, according to the banks’ unaudited financial statements as of June 2017.” Moody’s noted.

HF Group Kshs. 10.70 (+2.39%) moved 287,800 shares while Standard Chartered Kshs. 226 (-2.16%) retreated on thin volume. The latter started the year with a share price of Kshs. 186, now +21.5%.

Commercial and Services

In an unusual spike in volume, Eveready Kshs. 2.15 (-6.52%) experienced the flow of 751,600 shares. Its 52-week low is Kshs. 2.10, indicating the potential for a speculative upside. The NAV is Kshs. 4.04 per share.

Kenya Airways Kshs. 4.75 (-1.04%) remained fairly stable in the air; 926,400 shares flew through the market.

Uchumi Kshs. 3.50 (+11.11%) saw the barter of 437,000 shares, booking gains for speculators despite its empty shelves.

Construction and Allied

ARM Kshs. 13 (-7.14%) experienced 2,547,500 shares exchange hands. Net foreign inflows solidify this share as a good speculative counter. Contentment of a Buddhist monk would be required with a target of Kshs. 14 as its poised higher. Dips below Kshs. 13, would be an attractive entry point for wily and astute investors.

Energy and Petroleum

Kenolkobil Kshs. 15.95 (-0.31%) saw a stream of 2,455,800 shares pass through the market’s pipelines.

Umeme Kshs. 13.50 (-3.57%) experienced low voltage albeit on thin volumes. In a surprising show of stability, the rest of the counters in the sector remained unchanged.

Insurance

Kenya-Re Kshs. 19.75 (-1.25%) saw new buyers lay claim over 2,103,300 shares while CIC Insurance Kshs. 5.30 (-0.93%) traded 467,900 shares.

Britam Kshs. 15.20 (+1.33%) chugged upwards on moderate movement of shares. A target of Kshs. 16 is not akin to the Opposition leader joining the country’s ruling party.

Investment and Investment Services

Centum Kshs. 40.50 (-1.22%) moved only 117,100 shares, indicating limited supply at these levels. The cheap share is bound to break free from its shackles of jejune stability.

NSE Kshs. 18.65 (-0.80%) saw 116,500 shares pass meaningfully through the board.

Sources: AllAfrica, BusinessDaily, Standard, @NSE Kenya Investors, Financial Times

@MihrThakar