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February 20, 2019

Buyers outpace sellers ahead of EABL results

Financial analyst Aly-Khan Satchu
Financial analyst Aly-Khan Satchu

The Dow-Jones Industrial Average closed above 20,000 for the first time ever in its history.

The US Stock market is self-evidently about the prospects for USA Inc under the leadership of President Donald J Trump.

The Dow has advanced 11 per cent since just before Trump’s election, at times posting the fastest rally for a new president since 1900.

Given Goldman Sachs' central role in diminishing Hillary Clinton's bona fides [re well-timed Wikileaks leaks which confirmed she had been paid by GS to speak to their Clients], and then the Institutions spectacular Takeover of the Trump Administration, its worthy of note that Goldman Sachs' +50 per cent rally since November 8th has been responsible for 20 per cent of the Dow Jones gains in 2017.

The MSCI Emerging Markets Index has returned to pre-November 8 levels.

Nairobi has had a simply frightful start to 2017 with the All Share -7.93 per cent (42 month Lows) and the NSE20 -10.37 per cent (2008 Lows) through this mornings open.

The market is in a disequilibrium and operating in such an environment can be like catching a falling knife but looking 12 months out, everything has to go wrong for Investors not to make money, in my opinion.

The Nairobi All Share fell 0.35 points to close at 122.42 a fresh low.

The NSE20 fell 31.49 points to close at 2824.32.

Equity turnover clocked Sh311.502 million.

EABL will report H1 earnings this morning and might well set the tone going forward.

Diego, EABL's parent, issued H1 earnings and reported a +4 per cent net sales growth in Africa and a +2.00 per cent growth in operating profit.

Allow me to thank Dougie Duncanson, luxury brand ambassador for Diageo Reserve, for an outstanding Robert Burns celebration at the Norfolk yesterday. Dougie show-cased Diageo's finest Whisky and Moshi Perera's Norfolk even served up some ''nouvelle-cuisine'' Haggis. So the timing was rather neat given that EABL will report H1 Earnings tomorrow morning. EABL announced they were selling a six-acre piece of property in Mombasa for about $7 million (Sh727.93). Investors will be keenly anticipating Mr. Cowan's first set of results. EABL had retreated -10.24 per cent in 2017 through this morning and had gotten caught up in the general market malaise. Investors yesterday calculated that the downdraft was overdone and buyers outpaced sellers by a factor of 10 to1. EABL firmed +0.46 per cent to close at Sh220.00 and traded 102,100 shares all at that level. EABL's flagship Beer Tusker Lager was -27 per cent at the previous FY mark and Investors will be keenly watching that.

KenGen eased -1.00 per cent to close at a Fresh all-time Low of 4.95 and traded heavy duty volume of 12.63 million shares worth 62.531 million. KenGen closed out the session trading at 5.40 +8.00 per cent. KenGen's share price is in disequilibrium.

Tea Prices are +6.3 per cent and coffee prices +9.3 per cent this year.

Safaricom firmed +0.275 per cent to close at 18.25 and was trading at session highs of 18.35 +0.82 per cent at the finish line. Safaricom traded 6.151m shares and buyers outpaced sellers by a ratio of 5 versus 3. Safaricom retreated -6.266 per cent start of the Year through January 17. Safaricom has rebounded +1.67 per cent since January 17 and will bounce further. Clearly, like there was outsize demand for Sterling at below 1.2000 to the dollar, there is real solid demand at 18.00.

Nation Media closed unchanged at 75.50 and traded 234,000 shares. Nation Media is -18.81% in 2017 and that follows on from a very big price retreat in 2016.

Sunil Sanger confirmed that ''All banking stocks except Equity Bank and Standard Chartered are trading at discount to book value!'' Its been torrid for Investors.

Barclays Bank saw intense volume action [versus its historical volume averages] and eased -1.38% to close at 7.15 with 8.629m shares worth 61.717m changing hands. Barclays Bank is -21.42% in 2017 and trades on a Trailing P/E Ratio of 4.612. This is now a plain egregious price. Interestingly, Arif Naqvi the Abraaj Group CEO once again through Abraaj's hat into the ring at Davos re the divestment of Barclays Africa.






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