Kenya: Trading Activities At NSE Expected to Increase in 2020 - Genghis

21 January 2020

Nairobi — Investors at the Nairobi Securities Exchange with lower prices can now begin trading at the exchange market with transaction opportunities expected to surge.

Genghis Capital Analyst, Patrick Mumu said this will be brought about by increased activities at NSE after it experienced low activities in the past two years owing to foreign investor outflow and a slight shake in the market during the repeal of the interest rate cap.

"There has been an increase in profit-taking in the last one week which is an indication that markets may have moved more than expected with the removal of the interest rates cap," said Genghis Capital Analyst, Patrick Mumu.

Kenya is currently trading at discounted multiples compared to its historical average despite last year's market rally.

The report also indicates that the banks are still taking the wait and see approach on the removal of the interest rates cap which is to determine how the lending happens with the private sector.

"Private sector credit growth is expected to improve but towards the end of 2019 the banks mentioned they will take a back seat now as they research on asset quality and government yields but private sector credit

Kenya's GDP is projected at 5.7 percent in 2020.

Senior Research Analyst Genghis Capital Churchill Ogutu says the growth will majorly be driven by various services and a slight one by agriculture which can be affected by uncertainties in the weather.

" Agriculture contributes 34percent to the nominal GDP but it is still susceptible to weather patterns but on the services segment, information and communication will push the growth though its contribution is currently at 3pecent its growth rate has been quite robust on an average of 11percent," said Ogutu.

However, the development could be limited by government spending through capital expenditure as well as a disbursement to county governments and increased household consumption.

The report also highlights that Private consumption will remain depressed considering news flow oversupplied with job cuts in the private sector.

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