Equities Turnover Slumped 60.2 Percent Last Week

Equities

Equities turnover slumped 60.2 percent to close the week at 1.7 billion shillings from 4.2 billion shillings the previous week.  Foreign investors remained net buyers with net inflows of 2.5 million US Dollars, compared to a net inflow of 2.2 million US Dollars recorded the previous week, with foreign investor participation declining to 70.3 percent from 84.0 percent the previous week.

Equity Group was the top mover during the week accounting for 23.0 percent of market activity, with net foreign inflows of 2.1 million US Dollars. The market is currently trading at a price to earnings ratio of 11.5x, versus a historical average of 13.7x, with a dividend yield of 6.6 percent versus a historical average of 3.4 percent.

Read: Investors Expected to Counter-check Valuations in Line with Estimated Impact of Banking Act

Visa has partnered with Co-operative Bank, Family Bank, KCB Group, and NIC Bank to deliver a new mobile payment system service (mVisa) to Kenyan consumers and merchants. mVisa allows users to directly access all funds in their bank accounts to pay merchants or individuals; users can send money to each other’s accounts directly via mobile as well as pay for goods and services without a point of sale machine regardless of the mobile provider being used.

mVisa will be available to both smartphones and feature phones, with the potential to provide a mobile payment service to nearly all 38 million phone users in Kenya. Consumers can also use the mVisa agents for domestic remittances as well as to access their cash if there is no ATM machine nearby. Our view is that the entry of mVisa into Kenya will continue to support financial inclusion, which currently stands at 75.0%. However, local mobile money platforms will face competitive pressures, particularly M-Pesa, which could in turn suppress Safaricom’s margins.

Markets

During the week, the market registered mixed performance with NASI and NSE 25 gaining by 0.1 percent and 0.4 percent, respectively, while NSE 20 declined marginally by 0.1 percent, taking their YTD performances to 9.7 percent, 17.5 percent, and 20.7 percent for NASI, NSE 25 and NSE 20, respectively.

Since the February 2015 peak, the market has lost 25.9 percent and 41.7 percent for NASI and NSE 20, respectively. This week’s performance was driven by gains in select stocks with EABL, Britam, Co-op and CFC Stanbic rising by 7.6 percent, 4.4 percent, 3.0 percent and 2.6 percent, respectively, despite subdued performance in some of the large cap stocks.

Key losers during the week were NIC Bank, KCB Group, ARM Cement, Bamburi and Equity Group shedding 7.2 percent, 7.1 percent, 6.4 percent, 3.6 percent and 2.9 percent, respectively.

Read more on the Cytonn Investments website.