Kenyan Shilling nears 98 resistance level as pressures ensue

Buhari Incumbency Hovers over NSE

The equities segment remained down-trodden, embracing previous weeks’ momentum. The NSE-20 share index rescinded 21.34 points to 4858.61 points as the NSE All Share Index (NASI) shed 0.47% to 164.14 points to peg the YtD return at -5.0% and 0.8% in that order. Market capitalization clawed back 0.48% to close at KES 2.296Tn as value of transactions ramped up 38.42% to KES 715.7Mn. Market breadth was skewed in favour of decliners, pegging at 1.27x, as 19 stocks declined while 15 stocks advanced. East African Breweries Ltd (NSE: EABL) and Safaricom Ltd (NSE: SCOM) emerged the day’s most actively traded counters accounting for 56.43% of the day’s traded value.

On a balance of factors, we foresee mixed activities of position-takers and profit-takers to determine the direction of the market for the week. We attribute the recent lull in the market to the lack of market-driving news capable of spurring investor activities and Nigeria’s transition to the incumbent Buhari regime (May 29th) that has deflected foreign investments to Nigeria in anticipation of a coming rally. However, taking stock of heavy discounts on majority of large market cap tickers; SCBK, EQTY, KCB, we remain optimistic of price reversal over the week.

NSE Equity Market Highlights

East African Breweries Ltd (NSE: EABL) was the mosttraded stock of the day accounting for 31.75% of total traded value with Safaricom Ltd (NSE: SCOM) following in pursuit to account for 24.69% of the total value.

Sameer Africa Ltd (NSE: FIRE) was the biggest gainer of the day up 3.77% to KES 5.50 reversing last week days’ momentum after depreciating 2 out of 5 trading days. Pan Africa Insurance Holdings Ltd (NSE: PAFR) halted its 16.0% WoW decline; going up 1.36%, after the markdown of its share price post-closure date.

Longhorn Publishers Ltd (NSE: LKL) led the decliners; paring by 4.05%, to peg its price at KES 7.10. Eveready, Sasini, Standard Group, and Nation Media followed suit shedding 3.45%, 2.82%, 2.03%, and 1.95% correspondingly.

Foreign Investor Participation:

Foreign investor participation edged up during Monday’s trading session accounting for 59.29% of total turnover against 40.71% local participation. Investors were active on the selling side resulting in net outflows worth KES 94.79Mn compared to net outflows worth KES 56.56Mn on Friday.

Foreign investors accounted for 59.29% of the NSE turnover as compared to 55.13% on Friday.

Investors were dominant on the distributive front recording net outflows worth KES 94.79Mn relative to net outflows worth KES 56.56Mn on Friday.

East Africa Breweries Limited (NSE: EABL) was the day’s highest traded stock, recording a turnover of KES 218.73Mn to account for 31.75% of total market activity and 51.55% of foreign activity. Safaricom Limited (NSE: SCOM) followed with a turnover of KES 92.26Mn representing 24.69% of total market activity and 22.68% of foreign activity.

Cooperative Bank Limited (NSE: COOP) posted the day’s highest foreign inflows of KES 10.22Mn, whilst Safaricom Limited (NSE: SCOM) posted the day’s highest foreign outflows worth KES 71.78Mn

Currency

Performance: The Kenyan Shilling (KES) dropped further against the US Dollar (USD) by 0.51% to 97.90 as the pair traded at a three year low on Monday as dollar demand by importers extended further pressure to the shilling, though tight liquidity in the money market kept the shilling from extending its weakening through the Central Bank’s auction of 2 and 10 year treasury bonds. The KES registered gains against the British Pound (GBP) and Euro (EUR) by 0.49% to 151.68 and 0.58% to 107.59 respectively as Greece sought to have its international creditors reduce conditions imposed on the release of bailout funds. On the regional front, the KES extended gains against the Tanzanian shilling (TZS) by 0.33% to 21.14 as gold exports remained low affecting foreign exchange inflows already rocked by reduced donor inflows.