1 January 2019

Kenya: NSE Dips As 2018 Ends On a Bear Market Territory

Nairobi, Kenya — The Nairobi Securities Exchange (NSE) lost 17 per cent on market capitalization for the year 2018 as the bourse closed annual trading on a bear run, occasioned by a dip in stocks and withdrawal of investments by foreign shareholders.

The bourse closed the year with a total market value of Ksh2.1 trillion against Ksh2.5 trillion posted at the close of the previous year, with more than a third of the listed firms reporting either profit drops, losses or issuing profit warnings.

Two listed firms- ARM Cement and Deacons East Africa were placed under administration as companies complained of a "tough business environment."

The bourse closed the year with the bench mark index, the NSE 20 share index down 23.66 per cent to stand at 2833.84. The all-inclusive NASI shed 17.97 per cent to settle at 140.43 while the NSE 25 share index dropped 731.79 points to settle at 3551.59 points.

This is despite a marginal rise in equity turnover which grew 2.37 per cent to Ksh175 billion from Ksh171 billion the previous year.

Annual trading volumes however decreased to 6.3 billion shares compared to 7 billion shares posted in year 2017.

The bonds market posted positive performance outpacing 2017 numbers in activity by 29 per cent to Ksh562 billion from Ks435billion.traded in year 2017.

During the year, the banking sector had shares worth Ksh64.9 billion transacted which accounted for 36.96 per cent of the year's traded value. Equity Group Holdings actively moved 595 million shares valued at Ksh27.6 billion at between Ksh34.50 and Ksh57.00.

KCB Group declined by 12.40 per cent to close the year at Ksh37.45, down from Ksh42.75 registered in year 2017with shares worth Ksh21.9 billion transacted. Co-operative Bank moved 201 million shares worth Ksh3.48 billion and closed at Ksh14.30.

Telecommunication company-Safaricom was however the main feature during the year with 2.27 billion shares valued at Ksh62 billion changing hands at between Ksh21.75 and Ksh33.50.

This was the all-time high for the only listed telco's shares with its trading activities accounting for 35.37 per cent of the year's traded value.

The construction and allied sector had shares worth Ksh3 billion transacted which accounted for 1.73 per cent of the year's traded value. Bamburi Cement touched a high of Ksh187.00 and a low of Ksh132.00 during the year with shares worth Ksh2.29 billion a transacted.

The energy and petroleum sector moved shares worth Ksh19.69 billion, which accounted for 11.21 per cent of the year's traded value. KenolKobil recorded a 36.07 per cent gain to close the year at Ksh19.05 with shares worth Ksh17 billion transacted. Kenya Power and Lighting Company on the other hand lost 55.27 per cent to Ksh4.07, moving 206 million shares valued at Ksh1.1 billion.

The insurance sector had shares worth Ksh3.8 billion transacted which accounted for 2.19 per cent of the year's traded value. Britam Holdings saw 115 million shares valued at Ksh1.6 billion changing hands during the year at between Ksh9.50 and Ksh15.85.

Kenya-Re closed the year 22.93 per cent lower to Ksh13.95 moving 67.9 million shares valued at Ksh1.1 billion.

The manufacturing and allied sector moved shares worth Ksh17.2 billion, which accounted for 9.82 per cent of the year's traded value.

East Africa Breweries Limited (EABL) was the most actively traded counter in this sector during the year with 59 million shares valued at Ksh13 million changing hands at between Ksh160.00 and Ksh270.00.

B.A.T shares slipped by 4.61 per cent to close the year at Ksh725.00 with shares worth Ksh3.2 billion transacted.

2018 financial performances

During the year,Sameer Africa, Bamburi Cement, Deacons East Africa , Kenya Power and Lighting Company(KPLC), HF Group and Sanlam all warned investors that their profits would plummet by at least 25 per cent.

KPLC which issued a profit warning in October reported a Sh1.9 billion profit, dropping from Sh5.3 billion declared in 2017 full year.

Deacons sunk into a Sh229.5 million half-year loss, a further dip from Sh180.4 million reported in June 2017.

Williamson Tea Kenya reported a Sh85 million half-year loss, down from a Sh43.4 million profit the previous year. Kapchorua Tea similarly sunk into a Sh76.5 million loss.

Housing Finance Group announced a pre-tax loss of Sh325 million for the period ending September 30, compared toSh231 million profit in a similar period the previous year.

Sanlam Kenya sank into a Sh1.53 billion net loss in the six months ended June, blamed on "bad investment decisions."

Bamburi Cement issued a profit warning in Q3. This came after it's half-year profits dropped fourfold to Sh399 million from the previous year's Sh1.84 billion.

"The expected decrease is mainly attributable to difficult market conditions as well as escalating international energy prices in both Kenya and Uganda, increasing power costs in Kenya," the cement maker said in a notice through the NSE.

Sameer Africa reported a net loss of Sh11.58 million in the six months to June, down from a profit of Sh3.85 million in 2017. The firm which stopped local manufacturing in favour of imports blamed the poor performance on delays in finalising an overseas manufacturing deal.

Centum Investment on the other hand saw its profits shrink 67 per cent to Sh2.7 billion, down from Sh8.1 billion.

Uchumi reported a Sh895.1 million loss while Home Afrika's half-year loss widened 8.8 per cent to Sh111.6 million. Another company that had a bad year was East African Cables whose loss was Sh303.4 million.

Eveready, Kenya Airways, Express Kenya and TPS Serena, Flame Tree and Kenya Orchards all performed dismally.

UAP, Crown Paints, Jubilee Insurance, Liberty Insurance and Kenya Electricity Generating Company (KenGen) did not impress either as they faced declines.

"The Nairobi Securities Exchange entered a bear market in Q3 and there is no discernible bullish catalyst in sight," Financial analyst Aly-Khan Satchu commented on the market performance.

The Capital Markets Authority(CMA) is however positive of a rebound this year, counting on a number of initiatives among them the "Ibuka" programme at the NSE which targets to support SMEs into listing at the bourse.

'Ibuka' is Swahili for emerging. NSE is using the programme as an incubation and acceleration platform mainly for SMEs.

"We are expecting investors to take advantage of the recovering market and opportunities which will come up," CMA chief executive Paul Muthaura said.

Kenya

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