29 June 2012

Kenya: NSE Still World's Number Three in Perfomance

The shilling traded as low as 85.70 versus the dollar during yesterday's session before recovering to 84.332 last. The euro shilling cross is at 104.74 and this is surely a policy issue, given the scale of our exports [flowers and softs] to Europe. I think the policy makers need to reduce the repo rate and allow theshilling to back up a little against the dollar, a consequence of which will be a less brutal euro shilling cross rate. The NSE20 retreated 29.17 points to close at 3709.84. The NSE20 retreated 29.17 points to close at 3709.84. The Nairobi Securities Exchange remains the third best performer world wide in 2012 behind Egypt and Venezuela. The Nairobi all share eased 0.30 Points to close at 80.50. Equity turnover was 247.851m and considerably lower that the previous session of 757.569m.

In Commercial and Services

Safaricom retreated 1.45% to close at 3.40 and traded 3.041m shares worth 10.359m. I did not expect this move lower off 3.50 a recent 10 and a half month closing high. I see the recent swoon as underpinned at 3.35 and a move through 3.50 as still reasonably imminent. ScanGroup closed unchanged at 54.50 Kenya Airways firmed 0.775% to close at 13.00 and traded 240,800 shares. TPS Serena firmed 3.529% to close at 44.00 on light trading of 1,200 shares.

Among Banks

Kenya Commercial Bank traded second. KCB closed unchanged at 23.00 and traded 2.78m shares worth 64.502m. There was buy side demand for just under 10m Shares on the board at the closing bell, 359% more than was traded during the session. There is a very solid buyer at 23.00, absorbing supply. The 47.44% return in 2012 has been achieved on volumes which rank at 10 year highs. Diamond Trust firmed 0.96% to close at 105.00 and traded 90,100 shares worth 9.460m. Internationally, Barclays Bank is caught in the regulators crosshairs. Here Barclays Bank eased 0.375% to close at 13.25 and traded 215,800 shares. Equity Bank firmed 25 cents to close at 21.25 on just 132,800 shares of volume.

In Industrial and Allied

KenolKobil retreated 8.917% to close at 14.30 and traded a 14.15-15.00 range and 570,200 shares worth 8.179m. EABL traded third. EABL retreated 1.32% to close at 223.00 and traded a 220.00-228.00 range and 135,400 shares. EABL has produced a total return of 31.104% in 2012, so far but 226.00 was an all time closing high struck June 26th and June 27th. I expect pullbacks to remain shallow and a move through 240.00 ahead of the full year earnings release. EABL's Competitor in Tanzania SABMiller TZ said it's considering suspending a $23 million capital investment plan this year because a tax increase announced by the government this month may curb beer consumption, which is interesting. Kenya Power KPLC traded fourth. KPLC firmed 0.99% to close at 15.20 and traded 803,900 shares worth 12.25m. KPLC has rallied 9.28% over the last three weeks. KenGen eased 1.117% to close at 8.85 and was trading at 8.60 -3.91% at the closing bell. KenGen traded 153,700 shares. KenGen has rallied 10.625% over the last three weeks. Mumias Sugar retreated 2.38% to close at 6.15 and traded 1.602m shares worth 9.871m. Mumias Sugar trades on a PE of 4.881.

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