Bourse Reopens in a 3-Year Low, Bear Run Sustained

At the start of the week, the adverse market conditions were sustained with the benchmark index, NSE 20 share index closing in a three year low, which was last witnessed on 12th October 2012. The NSE-20 Share Index retreated by 0.64%; falling below the psychological 4000 mark to perch at 3991.49 points whilst the NSE-25 Share Index plummeted by 1.11% to close at 4102.19 points.

Nairobi All Share Index (NASI) portrayed a similar trend, registering a decline of 0.67% to close at 140.92 whereas the market capitalization contracted by 0.67% to close at KES 1,982.19 billion. Equity turnover bucked the trend, gaining 39.10% to close at KES 544.71 million.

The banking sector is set for a consolidation phase if the proposed capital requirements set out in the Finance Act 2015, are approved by the parliament. Out of the 43 banks, 6 banks control 49.9% of the market share while 21 small banks and 6 medium banks control 8.4% and 41.7% market share respectively.

Three banks; National Bank of Kenya, Consolidated Bank of Kenya and Development Bank of Kenya, all with a significant proportion owned by the government (22.5%-NBKL, 50.2%-CBKL and 89.3%-DBKL) are in talks for a possible merger or consolidation. Kenya is keen on lowering the number of banks in the economy to have a reasonable number of banks which can compete effectively hence driving down the interest rates.

Equity Market Highlights

East African Breweries Ltd (NSE: EABL) was the most actively traded stock accounting for 21.29% of the total market activity. Equity Group Holdings Ltd (NSE: EQTY) clocked in second, accounting for 18.15% of the days traded value.

Sasini Ltd (NSE: SASN) capped the gainers chart with a price increase of 5.28% to close the day at KES 16.95. Olympia Capital Holdings Ltd (NSE: OCH) advanced 3.33%, to close the day in second position at KES 4.65. Liberty Kenya Holdings Ltd (NSE: CFCI) was the major laggard of the day, losing 7.91% to KES 19.80. Jubilee Holdings Ltd (NSE: JUB) followed the trend, depreciating by 5.65% to KES 468.00.