Central Bank Rate Expected to be Retained at 10 pc ahead of MPC Meeting

Fixed Income:

Secondary market turnover is expected to be remain underwhelming, with trading activity expected to pick up after the primary auction next week.

The expectation for the auction, which closes tomorrow, stands at  13% – 13.50% for the FXD3/2007/15  and 13.75%-14.35% for the FXD1/2008/20.

The Monetary Policy Committee (MPC) is marked to meet on 28th November 2016, with markets expecting the Central Bank Rate (CBR) to be retained at 10%.

Liquidity in the market improved, with Central Bank of Kenya (CBK) opting out of the market on 18/11/2016.

Corporate News:

Kenya Airways (NSE: KQ) formally opened six modern docking bays at Jomo Kenyatta International Airport (JKIA), on Friday. The national airline, which transports goods in 20 countries, had recently sold its large capacity Boeing 777-300, which directly impacted the firm’s cargo earnings- down to KES 3.7Bn. The new docking bays are expected to reduce inefficiency and under utilisation witnessed over the past five years, as a result of the airline using a single exit channel.  The counter has recently registered a significant increase in activity following supportive market sentiment, from a low of KES 3.40 in September (+91.18%); as a result of the appointment of Micheal Joseph as the board’s Chairman and the better-than expected 1H17 financial results. We expect this news to further propel the Kenya Airways counter, which closed trading at KES 6.75 (YTD: +32.65%) on Friday.

Atlas African Industries Listed (NSE: ADSS) was forced to cancel trading on the London Stock Exchange AIM market, as a result of not appointing a replacement nominated adviser (nomad). The company’s shares trading on AIM were cancelled with effect from 18 November, following the exit of

• their initial nomad on 17 October and the AIM’s admission policy that a replacement must be found within a one month period. The loss-making logistics firm is looking to invest in Africa-focused businesses, operating in the consumer sector, following a sale agreement on East African Packaging Holdings Limited (which includes the Chancho Project); as a result of Ethiopian tax authorities seizing KES 240Mn. The sale will book the company an immediate KES 25.4Mn loss from the KES 500Mn investment, raised in February 2016.

Trading Expectation:

Foreign participation was lower in Friday’s trading session, with foreigners contributing 42% to the market participation. East African Breweries Limited (NSE: EABL) was the day’s highest mover, with locals coming in to buy into the counter. The Kenya Commercial Bank Limited (NSE: KCB) counter had the highest foreign participation, while Diamond Trust Bank Kenya Limited (NSE: DTK) counter noted a marked interest in the counter – with locals buying into the counter during Friday’s session. We expect the market to be relatively tame due to the lack of market moving corporate news for the day.

Market Events

• Total Kenya Ltd 1H16 Financial Results, 23rd November 2016.
• Unga Ltd Books Closure, 01st December 2016. (First& Final Div: KES 1.00)
• Umeme Ltd Books Closure, 02nd December 2016. (Interim Div: UGX 11.00)

Economic Calendar