Kenyan Shilling Registers Losses Against the US Dollar

Equities:

The two indices performed poorly as the NSE-20 dropped 0.99% to 4487.38 and the NSE All Share Index shed 0.83% to close the trading day at 150.95, indicating that detrimental effects plagued the market. Equity turnover shed 41.99% to KES. 360Mn, as market capitalisation dropped 0.83% to close at KES. 2113Bn. Injurious conditions have persisted in the market as financial announcements follow suit, Sameer Africa (NSE: FIRE) and ARM (NSE: ARM) both posted losses, as after-tax profit declined 41% and 58%, respectively. The market breadth spelled a different story as the number of stocks that declined, 20, failed to outweigh the number of stocks that advanced, 22; producing a positive divergence for the third consecutive day.

Kenya Airways Ltd (NSE: KQ) announced one of the worst losses recorded in sub-Saharan Africa, as an expansion strategy floundered due to adverse industry conditions; resulting in a loss before tax of KES. 29.7Bn. A revenue turnover of KES. 110Bn could not offset ballooning unrealised losses and operating costs; despite costs savings such as a decline in fuel prices (fuel accounts for 40% of cost) and a one-off compensation from Boeing on the delay of deliverables. The partly owned government company has turned to debt to sustain operations, materialising in the form of a KES. 4.4Bn government bailout, further supplemented by a short-term commitment by KLM and a KES. 20.4Bn (USDKES 102.13) long-term loan from AfreximBank; the latter is packaged with reviewing and advisory services.

Currency

The Kenyan Shilling (KES) registered losses against the US Dollar (USD) by 0.33% breaching the 102 upper limit to settle at 102.13 following data results indicating US GDP growth by 2.3% in Quarter 2 2015 based on the advance estimates released by the Bureau of Economic Analysis. Further shedding was registered against the Sterling Pound (GBP) by 0.34% to 159.73 as the portended Fed rate hike later this year reinforced speculation the Bank of England will follow suit. The EURKES pair registered gains by 0.43% to register at 111.87 following a slowdown in inflation in German states. Furthermore, the shilling registered gains against the South African Rand (ZAR) by 1.08% to settle at 8.03 following the Fed’s announcement on the upcoming rate hike.