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February 23, 2019

The Nairobi Securities Exchange

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

The markets have a Fed rate hike priced at a probability of 90% this March. The US Dollar which has strengthened under President Trump and been making significant headway the world over as onvestors price in higher US interest rates.

Inflation spiked as high as 9.04% at the last read but as Razia Khan of Standard Chartered tweeted ''Before you panic about Kenyan CPI, every single component (ex-food) is showing <5% y/y inflation. But food is 36% of the CPI basket'' 

Given the gilt-edged inflation busting credibility that the Central Bank has, I reckon the markets will leave Dr. Njoroge with margin for manoeuvre.

The Meteorological risk is front and centre and the cause is an Indian Ocean climate event called the Indian Ocean Dipole which is parching East Africa. 

The Shilling was last at 102.915 and its performance seriously noteworthy especially  when you consider some of the malarkey that has been going on in the FX rates across the rest of Africa. 
The Nairobi All Share closed -0.60 points at 121.73 an 8 and 1/2 week Low.

The Nairobi NSE20 Index eased -7.34 points to close at 2961.78.

Equity turnover was light at 224.3 million

It certainly feels as if The Communications Authority and now Mr. Midiwo [who said In an interview with Reuters last week that he would introduce amendments to the banking and communication sector laws that would force the separation of M-Pesa from Safaricom] have a President Trump like ability to wrestle the Safaricom share price lower. My Views are that such a proposal is an egregious one and its effects would be to crash our bona fides as an investment destination. And this is the point, what can look and feel like a Game has outsize effects across Kenya Inc asset prices. Its Safaricom's decision to make and to try and legislate another outcome is just outrageous. And when investors ask about ''Policy-making'' risk this is it plain and simple. Safaricom eased -0.59% to close at a fresh 9 month low of 16.90. Volume was light at 1.536million shares signalling a base might be at hand. Safaricom is -11.74% in 2017 and the move overdone. 
KCB Group rallied +2% to close at 25.50 and traded 1.977 million shares. The share is cheap at -11.3% in 2017 ahead of its full year 16 earnings release. KCB has moved with despatch to right-size the footprint and might well positively surprise on the dividend front. 

StanBic Bank firmed +2.22% to close at 69.00 and traded 295,500 shares. StanBic Bank reported FY 16 earnings where FY EPS declined EPS -9.911%. Stanbic Bank is -2.212% in 2017. 

Barclays Bank rallied +2.33% to close at 8.80 and traded just 30,700 shares. Barclays Bank is -3.29% in 2017 and is underpinned at these levels after releasing better than in-line FY results. The share price is underpinned by a FY dividend of 80 cents a share worth a cool 9.09% on the current share price.

Stanchart was up ticked +1.45% to close at a 2017 high of 210.00 Stanchart is currently the only listed bank share in positive territory this year and is +11.11% in 2017.
KenGen firmed +0.8% to close at 6.30 on muscular volume of 3.8 million shares ahead of its today investor briefing at the Kempinski. The arrival of PIC on the shareholder register is uniformly positive. There is no good reason for the share price to trade below PIC's entry price. 

BAT was marked down -5.56% to close at 850.00 on just 200 shares of business. 

 Total Kenya up-shifted +4.705% to close at 17.80 and traded 31,300 shares. Total is +4.705% in 2017. 



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