Liquidity Crunch Helps Keep Kenyan Shilling at Bay

The Kenyan Shilling (KES) was stable during Wednesday’s trading session as liquidity in the money market tightened; traders expect the KES to remain steady over the next couple of days as corporates use local currency to pay taxes. The USDKES exchange rate held steady at 101.03 (12:30pm GMT) as the supply of dollars was well matched with demand.

On the other hand, the local unit shed 1.21% to 112.88 (12;30pm GMT) against the Euro (EUR) as the single unit currency rose to one-and-a-half week highs against the dollar on Tuesday after an unexpected devaluation of the Yuan by China’s central bank prompted investors to unwind euro-funded positions on the Chinese currency. On the regional forefront, the KES posted marginal gains of 0.03% against the Rand (ZAR) as the peer currency weakened as China’s exchange rate intervention entered its second day.

CFC Stanbic Bank Distorts the Sectors’ Profitability Trend

The Kenyan Equities market snapped its two-day positive run which offered investors respite from the persistent losing streak. The benchmark indicator, NSE-20 index lost 0.46% to close at 4499.06 points while the NASI declined by 0.19% to close at 154.61 points. Value traded closed on a dismal note of KES 0.247Bn, having edged down by 74.81% which was propagated by a decline in the volumes traded during today’s session. Investors’ wealth also contracted by a marginal 0.19% to KES 2.165Tn. The advancers were slightly outweighed by the decliners (19; 20) an indication of resumption fairly decent market conditions.

On the third trading day of the week, listed lenders’ half year results continued streaming in with Cooperative Bank of Kenya (NSE: COOP) and CFC Stanbic Bank Holdings (NSE: CFC) releasing their results today. Growth in profitability and balance sheet growth has continued to underpin the strong performance being exhibited by the banks hence the banking sector stocks have sustained a fairly stable performance in the past trading sessions. CFC Stanbic Bank however bucked the trend, posting a 35.4% decline in pre-tax profits to KES 2.68Bn (HY14, KES 4.15Bn) and a 43.9% drop in profits after tax to KES 1.82Bn (HY14, KES 3.24Bn).

The dismal performance was attributed to a plunge in the non-interest income funded by fees and commissions and forex trading income. The KES 0.75 interim dividend declared to shareholders failed to prop CFC’s stock price resulting in a 7.43% slide to KES 93.50.

Equity Market Highlights

Safaricom Ltd (NSE: SCOM) was the most traded stock for the day accounting for 34.74% of the total value traded following renewed foreign activity on the stock.

Kenya Commercial Bank Ltd (NSE: KCB) clocked in second accounting for 23.12% of the days traded value. Express Kenya Ltd (NSE: XPRS), capped the gainers list for the day propping up by 9.78% to KES 5.05 on the back of a small but significant volume of 200 shares traded, while Total Kenya Ltd (NSE: TOTL) gained by 5.81% to KES 22.75.

Marshalls E.A. Ltd (NSE: MASH) was the major laggard of the day, cutting back 10.00% of its value to KES 10.80. CFC Stanbic of Kenya Holdings Ltd (NSE: CFC) lost ground by 7.43% to KES 93.50 buoyed by loss of investor confidence resulting from the lenders decline in profits for the period ended June 2015.

Foreign Investor Participation

Foreign investor participation was well balanced during Wednesday’s trading session accounting for 53.67% of total turnover against 46.33% local participation. Foreign participants were dominant on the accumulative front; resulting in net inflows worth KES 5.04Mn compared to net inflows worth KES 174.27Mn on Tuesday.

Foreign investors accounted for 53.67% of the NSE turnover as compared to 63.63% on Tuesday.

Accumulation outweighed profit taking, resulting in net inflows worth KES 174.27Mn relative to net inflows worth KES 5.04Mn on Tuesday.

Safaricom Limited (NSE: SCOM) was the day’s highest traded stock, recording a turnover of KES 56.53Mn to account for 22.93% of total market activity and 42.72% of foreign activity Kenya Commercial Bank Limited (NSE: KCB) followed with a turnover of KES 42.92Mn representing 17.41% of total market activity and 32.44% of foreign activity.

Kenya Commercial Bank Limited (NSE: KCB) posted the day’s highest inflows worth KES 8.38Mn whilst Umeme Limited (NSE: UMME) posted the day’s highest outflows worth KES 6.15Mn.