Equities Break a Three-Day Losing Streak

Equities broke a three-day losing streak to close in the gain territory on lower turnover in the day’s trading.

Shareholder value increased by 23.9 billion shillings on the back of a general price increase in most counters as depicted by an improvement in the A/D ratio to 0.93x from 0.42x recorded in the previous session.

East African Breweries Ltd (NSE: EABL) dominated market activity at 34.7 percent of total activity as investors exited the counter pushing the price down by 0.41 percent in the session.  The top five movers accounted for 92.8 percent of total market turnover.

Foreign investor activity ticked up to 50.2 percent from 48.8 percent recorded previously. Activity was mainly seen in East African Breweries Ltd (NSE: EABL), Safaricom Plc (NSE: SCOM) and KCB Group Plc (NSE: KCB).

Buy-ins were in KCB and sell-offs in EABL and SCOM with the three counters collectively accounting for 96.2 percent of total foreign trades. Foreign investors were net sellers for the eighth consecutive session.

The bond turnover levels came down a further 63.3 percent in today’s session to 0.45 billion shillings on 21 deals from 24 deals previously.

The local unit closed at 103.80 yesterday and is poised to open under pressure this morning. We believe this is being driven by offshore activity on the equity market who have emerged as net sellers this week as they realize gains made this year before the end of their reporting periods.

The shilling weakness could also be another reason the CBK has not come in to redistribute liquidity in the Kenyan shilling money market despite the overnight rate hitting a high of 14 percent on Tuesday.

Attention remains riveted on this month’s bond issue, infrastructure bond (IFB), as investors look to raise funding to apply for the bond. Our initial estimates for the expected average rate are 12 -12.45 percent.