Kenyan Shilling Trades On Unsteady Footing

Kenyan Shilling Trades On Unsteady Footing

The Kenyan shilling recorded marginal gains against international peers during Monday’s trading session as it shifted up by a marginal 0.01% against the US Dollar. Despite the slight gains the local unit remains vulnerable as month end dollar demand continues to pile. Traders are expecting Central Bank action after the USDKES exchange rate breached the 102 level last week. A ratings review from Fitch has further dampened local exchange rate prospects after the agency forecasted that it see’s debt rising to 53.2% of GDP by FY16 whilst the budget deficit is expected to grow by 8% of GDP. Consequently, the rating’s agency revised Kenya’s outlook to from B stable to B negative.

Safaricom Ltd Faces Turf War from Equity Group

During Monday’s trading session, the NSE-20 share tapered by 0.23% to settle at 4627.90 while the NASI edged up by 0.23% to close at 156.32 points. Equity turnover was also on a losing streak, losing a marginal 4.30% to close at KES 0.762Bn. Shareholders’ wealth expanded by a marginal 0.23% to close at KES 2.189Tn. The A/D ratio weakened to 0.4x from 0.7x fanned by the decliners outweighing the advancers.

Safaricom Ltd (NSE: SCOM) yet again took another stab from Equity Group Holdings Ltd (NSE: EQTY) following the launch of its controversial thin SIM in a deal with Airtel Kenya seeking to offer voice, data and money transfer services. Equity Group will be riding on Airtel’s infrastructure to drive its systems. This comes at a time when the Kenyan telecom market continues to face strong headwinds from both the regulator and competition authority over Safaricom’s accusation over market dominance.

During the launch, Equity Group Holdings Ltd announced that they had already crossed 1Mn subscribers and were targeting to reach 5Mn subscribers by the end of the year. Consumers will be the biggest beneficiaries as this is portended to gash out any market anomalies arising from lack of competition among the players such as charging of exorbitant prices for their services. We however opine that this product may not affect heavily Safaricom’s business lines, due to its robust infrastructure and well cut out products on their money transfer platform, M-Pesa which have attracted a wide network of client base.

Equity Market Highlights

Safaricom Ltd (NSE: SCOM) was the most traded stock for the day accounting for 35.57% of the total value traded. British American Tobacco Kenya Ltd (NSE: BAT) came in second accounting for 14.12% of the days traded value.

Eveready East Africa Ltd (NSE: EVRD), shored up by 6.10% to KES 4.35. Kenya Commercial Bank Ltd (NSE: KCB) posted a 1.83% improvement to KES 55.50, recouping some marginal losses made in the previous trading sessions.

Express Kenya Ltd (NSE: XPRS) was the major laggard of the day, losing ground by 8.11% to KES 5.10. TPS Eastern Africa Ltd (NSE: TPSE) trailed behind declining by 4.23% to KES 34.00.

Foreign Investor Participation

Foreign investor participation retained strong momentum during Friday’s trading session accounting for 74.25% of total turnover against 25.75% local participation. Investors’ were dominant on the buying front; resulting in net inflows worth KES 2.43Mn compared to net outflows worth KES 876.72Mn on Friday.

Foreign investors accounted for 74.25% of the NSE turnover as compared to 68.65% on Friday.

Investors engaged in accumulative activities resulting in net inflows worth KES 2.43Mn relative to net inflows worth KES 876.72Mn on Friday.

Safaricom Limited (NSE: SCOM) was the day’s highest traded stock, recording a turnover of KES 237.02 Bn to account for 32.70% of total market activity and 44.05% of foreign activity whilst East African Breweries Limited (NSE: EABL) followed with a turnover of KES 105.48Mn representing 14.55% of total market activity and 19.60% of foreign activity.

Kenya Commercial Bank Limited (NSE: KCB) posted the day’s highest inflows of KES 37.63Mn whilst British American Tobacco (NSE: BAT) posted the day’s highest outflows worth KES 52.98 Mn.