Kenyan Shilling Reverses Positive Momentum During Wednesday’s Session

Equities closed higher on sustained bullish sentiment observed on Wednesday’s session. The market barometers edged higher with 0.02, 0.91 and 0.72 percent increase on the Nairobi All Share Index (NASI), NSE-20 Share and the NSE-25 Share Indices respectively.

The bullish trend today was backed by increased turnover, up by 72.30 percent to post 949.38 million shillings. Market capitalization shifted up a marginal 0.02 percent to close at 1,811 billion shillings. Market breadth, also indicated a strong bullish sentiment at 1.28x, albeit lower than yesterday’s 1.31x.

Barclays Bank of Kenya (NSE: BBK), Commercial Bank of Africa, Standard Chartered Bank of Kenya (NSE: SCBK), Equity Group Holdings (NSE: EQTY) have been granted approval by the Central Bank to use a real-time transfer platform to manage their inter-bank transactions.

The payment services firm (Integrated Payments Service Limited (IPSL)), is 100 percent-owned subsidiary of Kenya Bankers Association (KBA) which seeks to close the time-lag gap posed by the existing Real Time Gross Settlement (RTGS) platform.

The transaction switch provides subsidies for its members (bank account holders) and through agents (non- bank account holders). This poses a major challenge for M-PESA, which has been the dominant P2P money transfer platform as the product allows huge currency transactions (M-PESA’s disadvantage). We expect positive feedback from the industry fueled by low charges and increased efficiency of the new product with Tier 1 banks reaping the largest benefits.

Foreign Investors’ Participation at the NSE on Wednesday

Foreign investors accounted for 59.29 percent of total turnover down 5.71 percent from the previous session. Accumulative activities controlled the session with net inflows of 189.29 million shillings compared to Tuesday’s net outflows of 16.89 million shillings.

Safaricom Ltd. (NSE: SCOM), maintained its position as the day’s most traded stock with a turnover of 222.90 million shillings representing 23.48 percent of total activity and 41.72 percent of foreign investor activity.

Equity Group Holdings Ltd. (NSE: EQTY) came second, recording a turnover of KES 156.38Mn; accounting for 16.47 percent of total market activity and 29.27 percent of foreign investor activity.

Equity Group Holdings Ltd. (NSE: EQTY) logged the day’s highest net inflows of 102.18 million shillings while Barclays Bank of Kenya Ltd. (NSE: BBK) posted the day’s highest net outflows 6.36 million shillings.

Performance of Kenyan Shilling on Wednesday

The Kenyan shilling reversed the hitherto weekly gains, declining against six of the seven international and regional currencies.

The local currency eased 0.12 percent against the dollar to close at 103.80. The green back was uplifted by trade balance data announced in the previous session that pointed towards a slight improvement in the monthly trade deficit.

Recently, the dollar has been in a whipsaw, with the market sieving US President Donald Trump’s latest policy moves and its repercussions; the travel ban on select countries. Across the pond, the shilling showed a mixed performance against the pound and euro currencies.

The pound was elevated on remarks from Kristin Forbes, an external member of Bank of England’s MPC, who stated that interest rates may be adjusted higher in the event of growth pick up and inflation acceleration. The euro currency was depressed 0.09 percent in the trading session, weighed down by the mounting political concerns centered on the upcoming elections in Euro Zone countries.

Regionally, the local currency shed 0.18 percent and 0.11 percent against the Ugandan shilling and Tanzanian shilling respectively. The Ugandan currency was boosted by foreign inflows towards a number of sectors.