Equities Close the Week in the Red, How Will Next Week Be?

Equities closed the week on a low note, with the benchmarks diverting day on day on 119 percent higher turnover.

Safaricom Ltd held as the highest mover, but closing 1.98 percent lower at the prices of 24.75 shillings per share on a continued bearish sentiment from local investors. East African Breweries Ltd, on the other hand, was unchanged in price despite being among the top traded counters on Friday. The top traded banks closed lower, on a bearish sentiment observed across the banking sector.

Foreign investors traded 64.6 percent of the Friday’s market turnover, higher than previous sessions which were at 53.9 percent. Bullish activity continued on Safaricom Plc for the fourth consecutive day, and in Centum Investments Plc.

Sell-offs were mostly on banks, mainly on Equity Group Holdings, Diamond Trust Bank Kenya, and KCB Group Ltd. The session closed on the net selling side by foreign investors.

Bonds turnover rose to 3.88 billion shillings from 0.99 billion shillings on 75 deals compared to 26 dealt previously.

In other business news, Unga Group Ltd announced a 57.5 percent drop in FY17 EPS (continuing operations) to 1.85 shillings. Sales were flat y/y, +3.1% while total operations cost rose 6.0 percent driving operating profit down by 71.7 percent. Key revenue centers faced challenges with the 3-yr loss-making Ugandan subsidiary being discontinued.

Kenya’s credit market was tight which affected the retail sector and coupled with problems at its key bakery partner, Nakumatt Stores, its bakery operations were negatively affected. The business has therefore decided to venture into the direct distribution of its confectioneries.

Additionally, the business has increased its grain storage capacity and established new fish feed and wheat milling facilities at Eldoret. Despite the poor results, the board has recommended a dividend of 1.00 shilling per share to shareholders in the register by December 5th. Year to date, the counter has underperformed, down 15.9 percent against NSE-20 +16.7 percent.