Market Watch: 11th March 2015

The NSE 20 share index shed 6.26 points to 5,362.43 points flanked by weighty profit taking on the large cap counters. The NASI spanned 0.11% to 172.71 points buoying market capitalization to Kes 2.411Tn. Equity turnover edged lower by 56.71% to Kes 0.58Bn worth of traded shares on the back of Equity Group Holdings Ltd (NSE: EQTY) & Kenya Power & Lightning Co. Ltd (NSE: KPLC) shares that accounted for 46% of the day’s traded value. The day was marked by troubled sugar miller’s-Mumias Sugar Co. Ltd (NSE: MSC) announcement of its board resolution to raise authorized share capital and execution of a Kes 4 Billion rights issue.

Following Treasury’s Kes 1Billion bailout to pay arrears owed to farmers, the government (partial owner with 20% stake) proposed restructuring measures that would see close to 300 staff retrenched, halving of the management board with wide changes in the firm’s operations. With a possible lapse of the COMESA safeguards that would preempt heightened competition, in addition to its alarming Kes 2.08Bn half-year loss, the bailout is seen as the miller’s sole recourse for a turn-around in its going concern that closed at a Vwap of Kes 2.75 for the day.

Foreign investor participation slightly gained during Wednesday’s trading session with foreigner’s accounting for 44.14% of total turnover against 55.86% registered from local investors. Foreign investors were remained dominant on their selling position, cashing in net outflows worth Kes 352.98Mn compared to net outflows worth Kes 704.36Mn from Tuesday.

Foreign investors accounted for 44.14% of the NSE turnover from 41.86% on Tuesday. Investors engaged in profit taking activities recording net outflows worth Kes 352.98Mn relative to outflows worth Kes 704.36Mn on Tuesday.

Equity Group Holdings Limited (NSE: EQTY) was the day’s highest traded stock recording turnover worth Kes 102.85Mn to account for 17.68% of total market activity and 58.27% of foreign activity. Kenya Power (NSE: KPLC) followed with a turnover of Kes 24.3Mn representing 4.18% of total market activity and 13.77% of foreign activity.

Kenya Commercial Bank (NSE: KCB) posted the day’s highest inflows of Kes 5.20Mn, whilst Equity Group Holdings Limited (NSE: EQTY) posted the day’s highest outflows worth Kes 89.38Mn.

Currency

Performance: The local currency experienced a mixed trading performance during Wednesday’s trading session. The local currency extended gains against the Euro (EUR) by 1.02% to 97.41 as the European Central Bank’s (ECB) purchases of sovereign bonds under the Quantitative Easing (QE) mechanism sent bond yields to record lows across the Eurozone.

The USDKES pair slightly weakened following a global dollar rally as expectations surge on a Fed rate hike sooner than was earlier anticipated, though foreign inflows for the infrastructure bond has capped the shilling from protruding the 92 upper limit. Moreover, the KES weakened against the British Pound (GBP) by 0.16% to 138.16 as speculation of an increased divergence between the GBP and the EUR continues to rise.