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November 18, 2018

Bear run persists at the bourse

Kenya shilling notes./FILE
Kenya shilling notes./FILE

The World Bank issued their flagship global outlook report for 2017. They are expecting an uptick in sub-Saharan Africa’s gross domestic product, excluding South Africa, from 1.8 per cent in 2016 (a 20-year low) to 3.5 per cent for FY 2017. The World Bank is expecting a 6.0 per cent expansion in 2017 in Kenya. Stanbic Bank cut their Kenya forecast to 5.4 per cent on Tuesday.

The shilling was stable at 103.80 to the dollar and a lot of the future direction will depend on oil which, I think, is headed lower, which will be supportive for the shilling. It’s been a torrid start at the exchange in 2017. The efficient markets theory posits that markets are forward-looking – well we have everything negative properly baked into the price now. The All Share could not staunch the bleeding and slumped a further -1.14 per cent to close at 125.76 levels last visited in September 2013. The All Share is -5.68 per cent in 2017. The Nairobi NSE20 Index fell 36.00 points and closed at 3047.68, and is edging ever closer to the 3,000 level. Equity turnover clocked Sh579.981 million.

Safaricom was the most actively traded share again and eased -1.1 per cent to close at 18.00, and traded 16.375 million shares worth Sh294.9 million. Safaricom has retreated -6.00 per cent in 2017. Safaricom trades on a trailing PE of 18.94 and accelerated H1 PAT by +30.6 per cent. This is now an opportunity to buy fast-paced growth at a discount.

Kenya Re was actively traded and rallied +3.41 per cent to close at 22.75 on heavy volume action of 4.038 million shares (0.57 per cent of its issued shares) worth Sh91.877 million. Kenya Re trades on an undemanding PE of 4.46. Today’s trading volume was well above the volume daily moving average.

Britam corrected -4.14 per cent lower to close at 10.40. Britam is +4 per cent in 2017 having traded shares as high as +39 per cent intra day last week.

The banking sector remains under sell-side pressure. KCB Group eased -0.92 per cent to close at Sh27.00 and traded 2.974 million shares. KCB is -6.08 per cent in 2017. Equity Group had 32 sellers for every buyer and closed -2.72 per cent at 26.75 and traded 150,100 shares. Equity has slumped -10.83 per cent since the start of the year. Standard Chartered remains an outlier like it was in 2016 and up-ticked +2.22 per cent to close at Sh184.00. Demand outpaces supply by a factor of four to one which indicates good support for the price at these levels. EABL eased a further -0.44 per cent to close at Sh223.00 and traded 385,400 shares. EABL is down a whopping -8.606 per cent in 2016 and EABL is badly overcooked to the downside. East African Portland Cement was high-ticked +3.23 per cent to close at Sh24.00.

Aly-Khan is a financial analyst

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