National Bank seeking KES 1.2 billion to shore up its capital base

Investors Ward off the Dividend Payment Suspension

On the second day of trading, all market indices closed in the green, indicative of a rather optimistic direction for the equities market. The NSE-20 share index propped up 0.29% to 4773.23 points as the NASI bucked the trend, gaining 0.08% to 162.88 points.

Market capitalization went up; 0.08% to KES 2.278Bn despite five sectors remaining unmoved as a result of no change in the constituent’s share prices. Equity turnover shored up by 18.71% to KES 516.49Mn with the A/D ratio standing at 1.08x.

Banking sector posted majority of the day’s activity (20.07% of the traded volumes) despite other sectors closing unchanged. This comes in the wake of the banking sector receiving stringent rules regarding their core capital requirements where they are expected to have a minimum capital of KES 5Bn by end of 2018 which will be effected in stages.

National Bank of Kenya (NSE: NBK) is one of the banks which stands to be adversely affected following the regulator’s failure to endorse the bank to proceed with its KES 13Bn cash call. Conscious of what awaits them, the bank suspended payment of dividends and put up for sale buildings that housed 12 of its branches in an attempt to raise KES 1.2 billion to shore up its capital base in the wake of the delayed rights issue. Despite the negative retort, the bank gained 1.20% to close the day at KES 21.00

NSE Equity Market Highlights

Safaricom Ltd (NSE: SCOM) was the most traded stock accounting for 34.39% of the total value traded as Kenya Commercial Bank Ltd (NSE: KCB) lagged behind accounting for 20.03% of the days traded value.

Standard Group Ltd (NSE: SGL) was the top gainer edging up 8.96% to KES 36.50. Kenya Airways Ltd (NSE: KQ) followed suit posting a 6.25% gain to KES 6.80 clinching the day’s second best gainer position following increased investor appetite after the government’s proposition to offer a bailout.

Express Kenya Ltd. (NSE: XPRS) was the major laggard of the day losing 8.33% to KES 5.50 as Uchumi Supermarkets Ltd (NSE: UCHM) dwindled by 8.21% to KES 8.95 on the back of heightened distribution activities post changes in the management which could have sparked negative sentiments from investors.

Foreign Investor Participation

Foreign investor participation was weak during Tuesday’s trading session accounting for 37.84% of total turnover against 62.16% local participation. Investors were active on the buying front; resulting in net outflows worth KES 72.60Mn compared to net outflows worth KES 10.41Mn on Monday.

Foreign investors accounted for 37.84% of the NSE turnover as compared to 57.11% on Monday.

Accumulative activities outweighed distribution, resulting in net inflows worth KES 72.60Mn relative to net outflows worth KES 10.41Mn on Monday.

Kenya Commercial Bank Limited (NSE: KCB) was the day’s highest traded stock, recording a turnover of KES 87.47Mn to account for 16.93% of total market activity and 44.75% of foreign activity whilst Safaricom Limited (NSE: SCOM) followed with a turnover of KES 75.60Mn representing 14.64% of total market activity and 38.68% of foreign activity.

Safaricom Limited (NSE: SCOM) posted the day’s highest inflows of KES 63.67Mn, whilst Jubilee Holdings Limited (NSE: JUB) posted the day’s highest outflows worth KES 12.37Mn.

KES Marginally Volatile Against Major Peers

Performance: The Kenyan Shilling traded on a weak note during Tuesday’s trading session as it was weighed down by growing demand for foreign currency as importers prepared to make month-end payments. The USDKES exchange rate marginally shed 0.11% to settle at 97.35 (12:30pm GMT) as the US Dollar continued to strengthen globally on the back of strong economic data supporting a strong recovery for the US economy.

The largest loss was reported against the Sterling Pound (GBP) whereas the local currency weakened by 0.66% to 152.24 (12:30pm GMT). Since the start of the week, the GBP has posted gains against most commodity driven currencies spurred by positive UK economic data releases. UK’s trade balances figures illustrated that the nation’s trade deficit narrowed by more-than-anticipated in April; partly triggered by an uptick in exports.