Markets in Focus: Turnover Dips To KES 2.3 Billion, MPC To Meet

Turnover in the previous session dipped to 2.3 billion shillings after the announcement of the TAP sale as the focus has since shifted to the trading of the IFB.

However, market analysts are not very bullish about it due to the tight liquidity in the market. Analysts say that the market is still seeing trades on the medium-to short-term papers. CBK stayed out of the market citing a square market.

The KES averaged at 102.35 as the inter-bank rate remained steady to close at 4.53 percent. Uptake of the T-Bills went down with CBK accepting 8 billion shillings of the 24 billion shillings issued.

Kenya Power Announces Results, Profits Sharply Dip

Kenya Power & Lighting Company announced its FY18 results marking a 63.8 percent y/y decline in EPS to 0.98 shillings from 2.71 shillings in FY17.

Operating income fell 20.9% y/y impacted by a 4.5 percent y/y increase in total power purchase costs as well as a 14.1 percent y/y uptick in transmission and distribution costs. The increase in the latter cost item was attributed to higher debtors’ provisions, increased depreciation in line with increased capital investments as well as the rising cost of doing business.

Additionally, the bottom line was affected by a 29.3 percent y/y rise in finance costs to 7.8 billion shillings from 6.0 billion shillings in FY17 with continued reliance on short-term funding by the company to counter cash-flow shortfalls.

MPC Meets on Tuesday, Will the Shilling Guide the Conversation?

The Monetary Policy Committee (MPC) is expected to meet on Tuesday with market analysts saying that the recent weakening of the local currency is likely to be the main focus of the discussions during the meeting.

The Committee will be meeting against the backdrop of continued slow growth of private sector credit and a relatively stable macroeconomic environment where growth has improved compared to last year as reported by the Business Daily.

Analysts at Commercial Bank of Africa and Kingdom Securities, therefore, expect the MPC will leave the base rate unchanged at nine percent, largely to wait and see the developments in inflation and the exchange rate.