NSE Weekly Market Review

A robust week (ending 16 June 2017) saw 282.2 million shares traded with a total turnover of Kshs. 5.78 billion.

The benchmark NSE 20 index edged up to 3541.35 (+2.10%), the broad NASI to 154.08 (+2.36%) and the NSE 25 also continued its upward trend to 4067.36 (+2.14%).

As is more often than not, Safaricom led the movers with 130.7 million shares passing hands (almost 50% of all trades), closing at a price of Kshs. 23.50 (+3.30%) per share. Dividend chasing investors seem to be warming up to the idea of MPESA expansion into other African countries, on the back of the Vodacom deal. Some mega price action is likely in the coming weeks, with the appearance of a price of at least Kshs. 25 per share.

In the banking sector Equity Group Kshs. 39.00 (0.00%) led the banking sector volumes after trading 15.15 million shares, followed by KCB Kshs. 37.00 (-7.50%) which moved 9.68 million shares. Investors are not taking kindly the proposition of the share swap deal for acquisition of National Bank. A possible dilution and the idea of ‘throwing good money after bad’ is what is worrying. However, fear not, if the takeover bid goes through, a very minimal dilution will take place and the lucrative government banking opportunities will definitely improve the KCB Group’s earnings, with Mr. Joshua Oigara’s brilliant decision making and cost cutting skills.

Co-operative bank Kshs. 17.20 (-0.58%) moved 9.29 million shares and is trading cum bonus. The Kshs. 1 billion tied up in Chase Bank does not have the ability to dampen the market’s confidence with regard to this strong Tier 1 banking counter. It is notably +76% from its 52 week low.

Barclays Kshs. 9.60 (-1.54%) saw 2.1 million shares exchange hands. The counter has started weakening after its recent rally of upward price action. DTK Kshs. 152.00 (7.04%) continues its rally after commendable profit growth (6%) in its Q1 2017 earnings, albeit on moderate volume.

NIC Kshs. 33.50 (+8.06%) moved 1.12 million shares. It is +34% in 2017.

National Bank of Kenya Kshs. 9.85 (+40.71%) was by far the biggest gainer of the week, moving a moderate volume of shares due to scarce supply. The takeover bid by KCB has really attracted capital gains, hungry speculators!

NSE Kshs. 15.80 (+2.27%) gained on thin volume but is already 43% up from its 52-week low of Kshs. 11.00 which was set in February this year. The bull market is bound to pay tribute to its facilitator and what better way to honour it than such amazing price action?

Centum Kshs. 41.25 (+3.13%) took a dip within the week due to a 16% plunge in its earnings, only to recover; heavy volume of 2.72 million shares. Income has actually increased if you ignore the one-off gains from profitable exits. Its dividend hike of 20% to Kshs. 1.20 is arguably in the league of major players like Safaricom.

The insurance sector saw Britam close at Kshs. 13.00 per share (+11.59%) crowning it the biggest gainer after trading 1.59 million shares. Its announcement of increased investments in the real estate sector comes as a new hope. Buying property during the election year is regarded as a good investment; if all goes well, property prices are likely to shoot up later this year.

Kengen closed at Kshs. 8.60 per share (+7.50%) trading 12.96 million shares and is +73% from its 52 week low of Kshs. 4.95. Those who bought at those depressed levels are likely to double their investment on heavy volume! KPLC Kshs. 7.95 (+10.42%) moved 1.47 million shares and is catching KENGEN’s excitement. Block trades on Kenol Kobil Kshs. 12.80 (+5.35%) saw it exchange 67.67 million shares, over 95% of which occurred on Friday 16th June. Investors are excited for the half year results, which are a stone’s throw away and will probably carry an interim dividend.

KQ closed at Kshs. 5.70 (-9.52%), the counter experienced some heavy turbulence after the news came out of the intention to convert the local creditor’s debt to equity, in addition to government increasing its stake in a similar conversion, leaving existing shareholders deeply diluted.

An extremely scary Genghis Capital report estimated a 5.7 times dilution. The counter fell for 3 straight sessions up to the maximum of -10% from Friday 9th June. However, it experienced a full 10% rebound after Parliament was stalled on the agenda of the government guarantee of $750m to local creditors. It later emerged, that the guarantee has passed through but no mention of the debt to equity stakes have been made. While the government’s debt to equity conversion will probably happen, third party creditors converting their debt into equity is a proposition that is too outrageous to take off.