Rich pickings at the NSE in 2021
In its brief note to clients, ICEA Lion Asset Management says Banks would be the most attractive at the Nairobi Securities Exchange (NSE) in 2021.
This is based on projections that lenders will cut down on their loan losses, sharply pushing their earnings this year.
With share prices falling below 25% in most bank counters, equities offer an attractive entry point and can deliver strong double-digit returns in 2021, especially banking stocks, said the brief.
Options in Fixed Income Securities segment
The investment bank observes that despite rising yields witnessed in the second half of 2020, the yield curve at the short and medium-end remained lower than the prior year, effectively putting pressure on real fixed income returns in a rising inflation environment.
The yield curve on the long end rose, albeit at a slower pace than in 2019.
Upward pressure on interest rates may resume in 2021 as the government faces renewed competition from the private sector for bank funding.
Private sector credit growth is expected to hit double digits for the first time in five years (since the advent of the rate cap)
“We recommend investors to seek short term fixed income securities so as to take advantage of any increase in rates this year.”
Figures indicate that while the benchmark NSE All Share Index was down 9% in 2020, analysts at ICEA Lion Asset Management paint the picture of a far worse plunge if it wasn’t for Safaricom.
On its global outlook, ICEA Lion Asset Management says. Economies in the US and Euro area recovered faster than expected in 2020, leading to upward revisions of GDP forecasts.
Asia’s economic activity is expected to contract the least in 2020 and to recover the fastest. On its global outlook, ICEA Lion Asset Management says. Economies in the US and Euro area recovered faster than expected in 2020, leading to upward revisions of GDP forecasts.
Sub Sahara Africa’s economic output fell the least compared to the prior year. Geopolitics and Brexit continue to be relevant factors.
New Investment Portal
ICEA Lion Asset Management has also launched an online portal that will enable its clients to access investment opportunities under the money market funds.
With a minimum of KSh 500 and a top-up of any amount, one can add value to hard-earned cash using the ICEA Lion’s Digitrust product.
“The pandemic has demonstrated that opportunity can truly arise from a crisis. We had already commenced our digital transformation but COVID-19 accelerated the need for use to serve our customers via cutting edge digital investment platforms such as DigiTrust.” said Einstein Kihanda, ICEA Lion Asset Management CEO, who is also the Vice-Chairman of the Institute of Certified Financial and Investment Analysts(ICIFA).
Kihanda, while launching the DigiTrust product, said the pandemic offers agile investors an opportunity to generate superior returns by leveraging digital investing tools.
“Our investment portal democratizes investment by making it both accessible and affordable. It enables individual savers and investors to deposit in and draw from our money market fund on a secure platform.” said Elizabeth Irungu, ICEA Lion Asset Management General Manager for Business Development and Client Relations.