Development Spending Slashed by 213.5 Billion Shillings

Treasury, in the mini-budget tabled last week, has slashed development spending by 213.5 billion shillings to 606.5 billion shillings from 820 billion shillings in the current financial year.

Projects to be trimmed include: Standard Gauge Railway (KES 43.4Bn), roads (KES 27.7Bn), power transmission (KES 46.5Bn), water projects (KES 18Bn), tourism promotion (KES 1.5Bn), power generation (KES 11.3Bn) and marine transport (KES 8Bn).

The cuts are to rein in the ballooning budget deficit. 41.8 billion shillings, representing 5.10 percent of the original 820 billion shillings allocated, had been spent towards development in the July-September 2016 period.

The Equities

Equities Market started the week on a wrong footing as gauged by the market indicators on Monday at the Nairobi Securities Exchange.

The NSE-20 Share Index declined by 0.55 percent to settle at 3230.00 points. NSE 25-Share Index slipped 15.01 points to close at 3580.32points. The Nairobi All Share Index (NASI) decreased by 0.26 percent to end the day at 136.08.

Shareholder wealth, as measured by market capitalization, narrowed 0.26 percent to 1.97 trillion shillings whereas equity turnover retreated 23.76 percent from 530.55 million shillings to 404.46 million shillings while the market breadth, as weighed by A/D ratio, improved from 0.59x to 0.79x; uplifted by the reduced gap between advancing stocks and declining stocks.

The Investment sector posted a 3.31 percent decline to emerge as the second lagging sector in the day’s trading session. Home Afrika Ltd (NSE: HAFR) retreated 8.00 percent off its Friday close to settle at 1.15 shillings.

The GEMS-listed property development firm has recorded a 55.77 percent year-to-date share price erosion from KES 2.60. The share price for Olympia Capital Holdings (NSE: OCH) was depressed 7.81 percent in the session to close at 2.95 shillings whereas Trans-Century Ltd (NSE: TCL) posted a 0.72 percent dilution to end at 6.85 shillings. Centum Investment Co. Ltd (NSE: ICDC) and Kurwitu Ventures Ltd (NSE: KURV) counters recorded a lull in their share price movement.

On the other hand, the foreign investors accounted for 88.05 percent of total turnover against 11.95 percent of local participation on Monday. Distributive activities took center-stage, resulting in net outflows worth 6.34 million shillings relative to net outflows worth 17.35 million shillings on Friday.

Other Market News

The CfC Stanbic Bank Kenya PMI rose to 53.3 in November from 52.0 in October, bolstered by new orders index that was at a 9-month high. Input stocks and new export orders also grew at a record pace. Stronger order books also resulted in substantial pressure on operating capacity; driving up staff hires.