Barclays Africa secures 63.3% stake in First Assurance

Equities

Listed Companies Continue to Boost Acquisition Activity

The NSE All Share Index continued to increase by 0.03% to 162.70 points, the growth rate levelled off from the previous day, as the index was dragged back by lacklustre performance on the local bourse. The market breadth exhibited this as the number of stocks that advanced, 16, failed to outweigh the number of stocks that declined, 20; a more familiar result considering the current market condition. The NSE-20 Share Index increased, gaining a mere 0.01% to 4744.95, as Market Capitalisation increased by 0.03% to KES 2.276Tn and equity turnover increased 18.31% to KES 775.75 Mn.

As the week draws to a close, companies listed on the local bourse remain active through mergers and acquisitions; a strategy common during a market correction, as shares trade on accurate valuation. R.E.A Trading Limited has seen its offer to acquire shares in REA Vipingo Plantations Limited (that it did not previously own) accepted by Capital Markets Authority.

The acquiring company increased its total holdings to 94.62%, allowing it to diversify; a luxury affordable by large scale companies that maintained healthy balance sheets to fund growth and withstand the current market conditions. Barclays Africa has also positioned itself to benefit from diversification, after securing a 63.3% stake in First Assurance, for KES 2.2 billion.

First Assurance will be the bank’s latest move from the corporate and retail market, while Barclays Life Assurance Kenya will run the formers life business. The 5% CGT tax has been eliminated after the dispute over payment between brokers and KRA saw the two lock horns, half of the investments brokers refused to pay, stating complications in calculations and distribution.

NSE Equity Market Highlights

Safaricom Ltd (NSE: SCOM) regained its position as the most traded stock of the day, accounting for 26.691% of the total value traded. Equity African Breweries Ltd. (NSE: EABL) followed closely, responsible for 26.73% of daily trades.

Carbacid Investment Ltd (NSE: CARB) was the highest gaining stock of the day up 2.78% to KES 18.50. A close second, Home Afrika Ltd. (NSE: HAFR) gained 1.72% to KES 2.95; in a day that saw relative poor performance by majority of stocks.

Pan Africa Insurance Holdings Ltd. (NSE: PAFR) was the main losing stock dropping by 4.40% to KES 76.00. TPS Eastern Africa Ltd. (NSE: TPSE) dropped 4.17% to KES 34.50.

Foreign Investor Participation

Foreign investor participation remained strong during Thursday’s trading session accounting for 57.11% of total turnover against 42.69% local participation. Investors were dominant on the selling front; resulting in net outflows worth KES 10.41Mn compared to net outflows worth KES 19.81Mn on Wednesday.

Foreign investors accounted for 57.11% of the NSE turnover as compared to 68.96% on Wednesday.

Distributive activities outweighed accumulation, resulting in net outflows worth KES 10.41Mn relative to net inflows worth KES 18.65Mn on Wednesday.

East African Breweries Limited (NSE: EABL) was the day’s highest traded stock, recording a turnover of KES 132.007Mn to account for 17.02% of total market activity and 26.69% of foreign activity whilst Equity Holdings Limited (NSE: EQTY) followed with a turnover of KES 71.48Mn representing 9.21% of total market activity and 16.08% of foreign activity.

East African Breweries Limited (NSE: EABL) posted the day’s highest inflows of KES 17.52Mn, whilst Safaricom Limited (NSE: SCOM) posted the day’s highest outflows worth KES 30.50Mn.

Currency

The Shilling Remains Vulnerable to Strengthening USD

Performance: The Kenyan Shilling traded on a stable ground during Thursday’s trading session reporting gains against major international and regional pairs. The USDKES exchange rate recorded a marginal loss of 0.08% at 97.07 as liquidity in the money market was relatively fluid; this urged the regulator to mop up liquidity for the second consecutive day offering TADs and REPOs worth KES 5 billion. The USDKES may be exposed to external volatility over the coming days as the US Dollar gains strength globally on the back of strong economic data.

U.S. business inventories increased by a seasonally adjusted 0.4% in April, compared to forecasts for a 0.2% gain in April whilst Wall Street opened higher for the second consecutive day as data revealed U.S. retail sales increased 1.2% in May, topping the 1.1% growth expected by economists, indicating a strong recovery path for the U.S economy.