Kenyan Shilling Slides Further to 100 Against the US Dollar

Kenyan Shilling Slides Further to 100 Against the US Dollar

The Kenyan shilling (KES) hit a new low during Monday’s trading session as it touched the 100 level against the USD Dollar (USD) intraday for the first time since October 2011. Factors placing pressure on the local unit include the worsening of the current account deficit and a strengthening USD globally which has hit new highs in recent days after Greeks voted against bailout conditions demanded by their creditors.

The Kenya National Bureau of Statistics noted that the current account deficit widened to KES 101.5 billion in the first quarter of 2015 from a deficit of KES 63.8 billion in the first quarter of 2014. Meanwhile, the KES also posted marginal weakening worth 0.05% and 0.17% against the Sterling Pound (GBP) and Euro (EUR), respectively, even as the Euro tanked after the Greek’s voted against strict fiscal austerity measures during the Referendum; which pushes Greece closer to exiting the Eurozone.

Kenyan Banks Are Ranking Top in List of Lender

The week beginning did not spell any good news for the local market, as a fourth consecutive drop saw the NSE-20 share shed 0.53% to reach 4814.11 and the NASI lost 0.04% to 161.43 points. The market breadth exhibited this as the number of stocks that advanced, 19, failed to outweigh the number of stocks that declined, 20; proving the tightening of market breadth would not be enough. Market capitalisation illustrated similar situation to the market, decreasing by o.o5% to KES.2260.08bn as equity turnover bucked a trend to gain a significant 733.22% to KES. 1864.42bn.

As the local bourse attempts to recover, banks accounted for 74.33% of turnover; as 186 million shares were traded. The attractiveness of Kenyan banks is reflected in global rankings, as three Kenyan banks were outliers amongst the Top 1000 banks in the global list (30 other African banks made the list).

Fourth on the Financial Times list was Equity bank, a top mover last week accounting for 65.2% of the market on foreign investor trading; as its profits soared to 48% of its capital, offering investors attractive returns. Further emphasising the attractiveness of this Kenyan sector, Kenya Commercial Bank and Co-op Bank were ranked sixth and seventh, respectively. The sector’s return on equity currently stands at 26.7%, based on the industry’s total profit before tax- KES. 141bn- with high interest margins largely being responsible. The introduction of Kenya Bankers Reference Rate (KBRR) and an increase in core capital however is likely to reduce this effect.

Equity Market Highlights

Equity Group Holdings Ltd (NSE: EQTY) remained the most traded stock accounting for 47.72% of the total value traded; after accounting for 65.15% at last weeks close. East African Breweries Ltd. (NSE: EABL) was close second accounting for 24.53% of the days traded value.

Kakuzi Ltd (NSE: KUKZ) topped the top gainers list, scaling 7.49% to KES 330.00. Williamson Tea Kenya Ltd (NSE: WTK) registered a 5.75% gain to KES 368.00, curving in as the day’s second best gainer after recovering from the previous week (where it was the second amongst the losing stocks).

Mumias Sugar Ltd. (NSE: MSC) climbed to claim the day’s top loser, shedding 6.67% to KES 2.10.

Unga Group Ltd. (NSE: UNGA) followed a close second as it retreated by 6.38% to KES 44.00; as the manufacturing and agriculture sector dominated the list of market movers.

Foreign Investor Participation:

Foreign investor participation accelerated during Monday’s trading session accounting for 82.17% of total turnover against 17.83% local participation. Investors’ remained dominant on the sell side; resulting in net outflows worth KES 26.99Mn compared to net inflows worth KES 2.74Mn on Friday.

Foreign investors accounted for 82.17% of the NSE turnover as compared to 68.49% on Friday.

Investors engaged in accumulative activities, resulting in net outflows worth KES 26.99Mn relative to net inflows worth KES 2.74Mn on Friday.

Equity Holdings Limited (NSE: EQTY) was the day’s highest traded stock, recording a turnover of KES 887.67Bn to account for 47.61% of total market activity and 57.94% of foreign activity whilst East African Breweries Limited (NSE: EABL) followed with a turnover of KES 422.02Mn representing 22.64% of total market activity and 27.55% of foreign activity.

Safaricom Limited (NSE: SCOM) posted the day’s highest inflows of KES 10.00Mn, whilst East African Breweries Limited (NSE: EABL) posted the day’s highest outflows worth KES 36.17Mn.