Corporate governance issues take market by storm

Corporate Governance Issues takes the Market by Storm

As the week nears the end, benchmark indicators appear to be improving with the major index closer to 4800 points, a point it last touched on 02nd June 2015. The NSE-20 share expanded by 0.10% to 4798.73 points as the NASI similarly appreciated by 0.07% to 162.68 points. Market capitalization bucked the trend closing higher than the previous day, up; 0.08% to KES 2.275Bn whereas the equity turnover registered a hefty decline of 43.07% to KES 1.259Bn on the back of considerable share price cuts on small cap counters such as Crown Paints Ltd.

A new wave of corporate governance issues have recently been observed to steer equity market activities, for instance last week we observed some heavy losses (14%) registered on Uchumi Ltd (NSE; UCHM) post the termination of the CEO, Jonathan Ciano and CFO, Chadwick Owino. The stock is currently trading at KES 8.95 having recently touched a high of KES 11.05 on 15th May 2015.

Today, National Bank of Kenya (NSE; NBK) suspended its CFO, soon after the lenders’ cash call hit a rock bottom when the Treasury and NSSF declared they would not be taking up their rights and instead recommending for the bank to merge with other government financial institutions. This could probably have opened up a new chapter of the continuing management wrangles facing listed companies hence we portend that this would cause a ripple effect on the share price in the coming days as investors continue factoring that information. NBK closed at par (KES 20.75) despite 7,000 shares exchanging hands.

Equity Market Highlights

Safaricom Ltd (NSE: SCOM) was the most traded stock accounting for 27.41% of the total value traded following heightened demand side activities. East African Breweries Ltd (NSE: EABL) lagged behind accounting for 20.04% of the days traded value.

Flame Tree Group Holdings Ltd (NSE: FTGH) capped the gainers list climbing up; 9.32% to KES 8.80 sparked by increased demand pressures. Liberty Kenya Holdings Ltd (NSE: CFCI) spanned by 8.82% gain to KES 27.75 settling in as the day’s second best gainer.

Crown Paints Kenya Ltd (NSE: BERG) was the major laggard of the day declining by a hefty 39.56% to KES 110.00 on account of increased distribution activities.

Trans-Century Ltd (NSE: TCL) rescinded by 2.34% to KES 12.50.

Foreign Investor Participation

Foreign investor participation remained strong during Thursday’s trading session accounting for 72.02% of total turnover against 27.97% local participation. Investors were dominant on the sell side; resulting in net outflows worth KES 9.83Mn compared to net inflows worth KES 38.99Mn on Wednesday.

Foreign investors accounted for 72.03% of the NSE turnover as compared to 81.21% on Wednesday.

Investors engaged in distributive activities, resulting in net outflows worth KES 9.83Mn relative to net inflows worth KES 38.99Mn on Wednesday.

Safaricom Limited (NSE: SCOM) was the day’s highest traded stock, recording a turnover of KES 315.92Bn to account for 25.09% of total market activity and 34.83% of foreign activity whilst East African Breweries Limited (NSE: EABL) followed with a turnover of KES 247.43Mn representing 19.65% of total market activity and 27.28% of foreign activity.

Kenya Commercial Bank Limited (NSE: KCB) posted the day’s highest inflows of KES 35.84Mn, whilst Liberty Holdings Limited (NSE: CFCI) posted the day’s highest inflows worth KES 70.88Mn.

CBK Sells Dollars to Curb Pressure

Performance: The Kenyan Shilling recorded gains against all its major international peers during Thursday’s trading session. The shilling made modest gains against the US Dollar (USD) by 0.15% to 98.50 as the Central Bank sold an unspecified amount of dollars in the market on Wednesday, curbing added end month pressures on the pair.

The shilling exerted the strongest gains against the Sterling Pound (GBP) by 0.20% to 154.94 while the shilling made further marginal gains of 0.09% against the Euro (EUR) to settle at 110.39 with on-going negotiations over Greek debt obligations taking centre stage. On the regional front, the shilling shed 0.18% against the South African Rand (ZAR) to 23.19 with the South African Anti-trust authorities indicating they will reach a settlement with world’s biggest banks accused of rigging rand trading.