Kenyan Shilling Weighed Down By US Dollar Demand

The US Dollar-Kenyan Shilling exchange rate was dampened by month end dollar demand from the energy sector, which saw it breaching the 100 level again to 101.29 (12:30pm GMT) during Monday’s trading session. Despite tight liquidity in the money market the Kenyan Shilling has displayed a weakening bias against major international peers as a result of subdued foreign exchange inflows. The Kenyan Shilling shed 0.46% and 0.50% against the Sterling Pound and Euro respectively. Regionally, the Kenyan Shilling garnered 1.53% against the Rand (ZAR); the South African unit fell to its weakest level in more than two weeks against the dollar, as concerns about growth in China, a key importer of local commodities, overrode a boost from a domestic interest rate increase.

East African Cables Set to Benefit from Increased Demand

The local bourse begun the week poorly, sustaining the adverse effects from the previous week, as both the NSE 20 and NSE All Share Index dropped. The NSE-20 shed 0.73% to 4467.36 and the NASI lost 0.10% to 153.02, emphasizing the negative sentiment in the market. Equity turnover better illustrated the current market conditions as a 3.42% drop saw turnover fall to KES. 461mn, with market capitalization following suit and decreasing 0.10% to KES. 2,142Bn.The market breadth, however, bucked the trend as the number of stocks that advanced, 21, matched the number of stocks that declined; the unbiased measure of stock performances thus showing that there was a slight improvement in the market.

Following a 5.5% growth in the building and construction sector, East African Cables’ Ltd (NSE: EAC) modernization of its Kitui Road factory places the company in a position to benefit from increased demand. The regional cable and conductor manufacturer recorded a 14.3% decline in profits, to KES. 341.1 million, as a result of increasing costs; which proved unsustainable.

The refurbishment is to be followed by the completion of a new factory in Nairobi’s industrial area- with both projects tallying up KES. 1 billion in costs- which will allow the company to service East Africa’s energy, real estate and telecommunications firms with medium voltage wires. Increased demand materializes in the form of a KES. 85 billion investment, from government and public listed companies, in the distribution of electricity; plus interest from Tanzania and Uganda to increase power generation by 1680MW and 600MW, respectively.

Kenya and other neighboring countries have often procured medium voltage wires, which have the capacity to transmit 110 kilovolts of power, from Indian manufacturers and other Asian-based producers.

Equity Market Highlights

Equity Group Holdings Ltd (NSE: EQTY) remained the most traded stock accounting for 24.82% of the total value traded. Safaricom Ltd. (NSE: SCOM) was second accounting for 22.18% of the days traded value; after leading the previous trading day with 24.76% of the days traded value.

Carbacid Investment Ltd. (NSE: CARB) topped the top gainers list, scaling 7.47% to KES 15.10. Standard Group Ltd. (NSE: SGL) registered a 7.35% gain to KES 36.50, curving in as the day’s second best gainer.

British American Tobacco Ltd. (NSE: BAT) climbed to claim the day’s top loser, shedding 8.61% to KES 743.00. Express Kenya Ltd. (NSE: XPRS) followed a close second as it retreated by 8.26% to KES 5.00.

Foreign Investor Participation

Foreign investor participation was robust during Monday’s trading session accounting for 64.02% of total turnover against 35.98% local participation. Foreign participants engaged in accumulative activities; resulting in net inflows worth KES 57.93Mn compared to net inflows worth KES 37.95Mn on Thursday.

Foreign investors accounted for 64.02% of the NSE turnover as compared to 54.20% on Thursday.

Investors were dominant on the buying front resulting in net inflows worth KES 57.93Mn relative to net inflows worth KES 37.95Mn on Thursday.

Equity Holdings Limited (NSE: EQTY) was the day’s highest traded stock, recording a turnover of KES 110.93Mn to account for 24.04% of total market activity and 37.55% of foreign activity whilst Safaricom Limited (NSE: SCOM) followed with a turnover of KES 65.24Mn representing 14.04% of total market activity and 22.09% of foreign activity.

Cooperative Bank Limited (NSE: COOP) posted the day’s highest inflows worth KES 23.29Mn whilst Equity Holdings Limited (NSE: EQTY) posted the day’s highest outflows worth KES 296,925.