How Kenya's stock market compared to Nigeria & S.Africa's in 2015 - CNBC Africa

How Kenya's stock market compared to Nigeria & S.Africa's in 2015

Financial

by Samuel Kerosi, Kenyan Wall Street 0

Africa’s largest economy, Nigeria’s stock market ended 2015 down 17.35 per cent. South Africa, its most advanced economy, fared better closing the year 1.87 per cent higher. But how did the most active stock market in East Africa do? Kenyan Wall Street allowed CNBC Africa to republish the article below, which first appeared at http://kenyanwallstreet.com/kenyas-2015-financial-market-report, to give our audience insight into what happened in 2015.

(Kenyan Wall Street) It has been a tough year at the Nairobi Securities Exchange in 2015 amidst a tough operating environment. We have tried demonstrating this using the various indices below.

NSE All Share Index

The NSE All Share Index began 2015 at 163.25 points and has dropped to close at 143.97 points as at 29th December, this represents an 11.8% drop.

K1

NSE 20 Share Index

The Benchmark NSE 20 Share Index began 2015 at 5,091.60 points and has closed at 4,004.91 points as at 29th December. This represents a decline of about 21.3%.

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FYI: The NSE 20 Share Index is a price weight index calculated as a mean of the shares of 20 public, listed companies. They are selected based on a weighted market performance during the period under review based on the following criteria:

  1. Trading activity measures i.e. market capitalization, shares traded, deals/liquidity and turnover during the period under review are weighed in the ratio of 4:3:2:1 respectively.
  2. A company must have a free float of at least 20%
  3. Must have a minimum market capitalization of KES 20 Million
  4. A company should ideally be a blue chip with superior profitability and dividend record.

NSE 20 Share Index constituent companies are as follows:

  1. Sasini Limited
  2. Kenya Airways
  3. Nation Media Group
  4. Scangroup
  5. Centum Investment Company
  6. Kenya Commercial Bank
  7. The Cooperative Bank of Kenya
  8. Standard Chartered Bank
  9. Barclays Bank of Kenya
  10. Equity Bank (Group)
  11. CFC Stanbic Holdings
  12. East African Breweries Limited
  13. British American Tobacco Kenya
  14. Athi River Mining (ARM Cement)
  15. Bamburi Cement
  16. KenolKobil
  17. Kenya Power
  18. Kenya Electricity Generating Company
  19. British-American Investments Company
  20. Safaricom Limited

Gainers of the Year 2015

2015 has been a challenging year, however, there have been counters which have been resilient in this tough times as shown below. It has been a big year for Agricultural stocks.

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Company

31 Dec. 2014 Price

29 Dec. 2015 Price

% Gain

Shares Traded

1.

Kakuzi

180.00

340.00

+88.89

649,600

2.

Sasini

12.85

21.38

+66.34

8,035,300

3.

Williamson Tea Kenya

248.00

399.50

+61.09

328,300

4.

Limuru Tea Company

771.00

1,085.00

+40.73

12,000

5.

Marshalls (E.A)

9.80

13.20

+34.69

216,700

6.

Bamburi Cement

139.00

176.00

+26.62

13,161,500

7.

Kapchorua Tea

137.00

172.00

+25.55

99,500

8.

Kenya Re-Insurance

17.05

21.00

+23.17

79,785,300

9.

Nairobi Securities Exchange

20.50

24.63

+20.12

82,576,600

10.

Safaricom Limited

14.05

15.98

+13.70

2,422,522,500

11.

Umeme

21.00

22.00

+4.76

39,385,300

12.

KenolKobil

8.70

8.78

+0.86

221,106,300

Notable Local Investors in the Green

  1. John Kibunga – Estimated paper gain in Kakuzi KES 859.6 Million
  2. Wanjui Joe – Estimated paper gain in Kakuzi KES 54.1 Million
  3. Gulamali Ismail – Estimated paper gain in Sasini KES 165.9 Million
  4. Karim Jamal – Estimated paper gain in Sasini KES 39.1 Million
  5. Satchu Aly Khan – Estimated paper gain in Sasini KES 10.5 Million
  6. Hassan Popat –Estimated paper gain in Limuru Tea KES 50.7 Million
  7. Gulamali Ismail – Estimated paper gain in Limuru Tea KES 48.3 Million
  8. Patelamarjeet Baloobhai Patel & Baloobhai Chhotabhai – Estimated paper gain in Bamburi KES 185 Million
  9. Patelamarjeet Baloobha Patel; Baloobhai – Estimated paper gain in Bamburi KES 37 Million
  10. Satchu Aly Khan – Estimated paper gain in Kapchorua Tea KES 2.2 Million
  11. Minesh Mulchand Shah – Estimated paper gain in Kapchorua Tea KES 1.5 Million
  12. Paul Wanderi Ndungu – Estimated paper gain in Kenya Re KES 9.2 Million
  13. Jackline Gathoni Gitaka – Estimated paper gain in Kenya Re KES 8.9 Million
  14. John Kibunga – Estimated paper gain in Safaricom KES 21.2 Million


Losers of the Year 2015

As we have mentioned before 2015 has been a very challenging year this has been reinforced with 15 companies issuing profit warnings expecting profits to be lower than 2014. The year has been generally bearish with a staggering 48 listed companies ending the year in the red zone.

Profit Warning Checklist (Listed Companies)

  1. BOC Gases
  2. ARM Cement
  3. Standard Chartered
  4. Uchumi Supermarkets
  5. Mumias Sugar
  6. Express Kenya
  7. E.A. Cables
  8. Standard Group
  9. Atlas Development and Support Services
  10. Sameer Africa
  11. Car & General
  12. Crown Paints
  13. BRITAM
  14. TPS Serena
  15. Pan Africa Insurance

Top 20 2015 losers are shown in the table below:

Company

31 Dec 2014 Price

29 Dec 2015 Price

% Loss

Shares Traded

1.

Atlas (ADSS)

12.05

2.00

– 83.40

2,416,400

2.

Trans-Century

19.35

7.63

– 60.59

7,480,000

3.

BRITAM

29.75

13.40

– 54.96

119,128,300

4.

Longhorn Publishers

9.25

4.20

– 54.59

11,822,500

5.

ARM Cement

86.00

40.50

– 52.91

38,257,400

6.

Housing Finance

45.75

21.75

– 52.46

60,629,700

7.

Pan Africa Insurance

120.00

61.50

– 48.75

2,163,800

8.

Home Afrika

4.10

2.20

– 46.34

73,548,900

9.

Kenya Airways

8.70

4.93

– 43.39

100,334,100

10.

National Bank of Kenya

24.75

14.38

– 41.92

6,707,100

11.

Eaagads

42.00

24.50

– 41.67

2,866,800

12.

Crown Paints

111.00

65.00

– 41.44

2,386,700

13.

Standard Chartered

335.00

202.50

– 39.55

4,826,600

14.

Sameer Africa

6.00

3.70

– 38.33

7,936,500

15.

E.A Cables

16.20

10.20

– 37.04

9,329,800

16.

CFC Stanbic Holdings

124.00

80.00

– 35.48

22,478,000

17.

KenGen

10.30

6.65

– 35.44

100,734,500

18.

Express

6.20

4.05

– 34.68

1,825,200

19.

CIC Insurance

9.60

6.35

– 33.85

96,373,400

20.

Nation Media Group

263.00

174.50

– 33.65

7,327,500

Heavily Traded Counters

Company

Shares Traded (31 Dec 2014 – 29 Dec 2015)

Safaricom

2,422,522,500

Equity Group

1,040,568,600

Kenya Commercial Bank

562,125,800

Mumias Sugar

347,684,000

Co-operative Bank

243,103,800

KenolKobil

221,106,300

Barclays Bank

167,863,200

Kenya Power

128,165,600

British-American Investments Company

119,128,300

Centum Investments

117,835,500

[Read Zimbabwe Stock Exchange sheds $1.27bn in market cap in 2015]

Fixed Income

Bond Market Performance Indicators 2010 – 2015

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We have also noticed trading during the year has been on short term bonds which have offered attractive interest rates. Long term papers have been shied off by investors and their subscription rates tell the story.

K5

Corporate bond turnover is still relatively low and investors prefer holding them to maturity.

Market Gender Equality

Males still dominate the market in terms of participation. We think it’s high time that the numbers change and the various market participants should look at an avenue in tapping the female gender in order to enhance financial inclusivity and bring more liquidity in the market.

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Forex Matters

The Shilling

The Kenyan Shilling depreciated further in 2015 on the back of a strong resilient dollar. The Shilling has depreciated around 13.2%. Emerging and Frontier markets have been on the receiving end of the dollar and almost all African currencies have depreciated against the greenback.

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Economic Highlights

GDP Growth Quarterly

Estimates of GDP show that Kenya’s economy expanded by 5.8% compared to 5.2% recorded in a similar quarter in 2014. Growth was supported by strong expansions in Agriculture, Construction, Financial and Insurance, Wholesale and Retail Trade and Transport and Storage.

Construction Industry grew by 14.1%, Mining and Quarrying by 12.5%, Electricity and Supply by 11.0% and Financial and Insurance sector by 10.1%

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K9

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Credit Ratings

Country

S&P

Moody’s

Fitch

Kenya

B+ Negative

B1 Stable

B+ Negative

Uganda

B Stable

B1 Negative

B+ Stable

Rwanda

B+ Stable

B+ Stable

Ethiopia

B Stable

B1 Stable

B Stable

Nigeria

B+ Stable

Ba3 Stable

BB- Negative

South Africa

BBB- Negative

Baa2 Negative

BBB- Stable

Ever wondered what this ratings represent? We have summarized a reference table which will provide more insights on the meaning of this ratings.

S&P

Moody’s

Fitch

Description

AAA

Aaa

AAA

Prime

AA+

Aa1

AA+

High Grade

AA

Aa2

AA

AA-

Aa3

AA-

A+

A1

A+

Upper Medium Grade

A

A2

A

A-

A3

A-

BBB+

Baa1

BBB+

Lower Medium Grade

BBB

Baa2

BBB

BBB-

Baa3

BBB-

BB+

Ba1

BB+

Non-Investment Grade Speculative

BB

Ba2

BB

BB-

Ba3

BB-

B+

B1

B+

Highly Speculative

B

B2

B

B-

B3

B-

CCC+

Caa1

CCC

Substantial Risks

CCC

Caa2

Extremely Speculative

CCC-

Caa3

In default with little prospect for recovery

CC

Ca

C

C

D

/

DDD

In Default

/

DD

D

Interest Rates

CBK’s benchmark interest rate was raised in June to 10% from the previous 8.5%. A month later in July it was raised further to 11.5% and has been held at that position throughout the year.

We managed to obtain data of the various rates and compiled them in the table for the 10 months to October.

Month

Repo

Reverse Repo

Interbank

91-Day T-Bill

182-Day T-Bill

364-Days T-Bill

Cash Reserve Requir.

CBK Rate

Jan

8.08

7.12

8.59

10.19

10.73

5.25

8.5

Feb

7.87

6.77

8.59

10.37

10.96

5.25

8.5

Mar

8.08

6.85

8.49

10.35

10.69

5.25

8.5

Apr

8.38

8.77

8.42

10.26

10.57

5.25

8.5

May

8.5

11.17

8.26

10.37

10.71

5.25

8.5

Jun

9.7

11.78

8.26

10.55

10.98

5.25

10

Jul

9.43

13.48

10.57

11.99

11.93

5.25

11.5

Aug

11.5

18.49

11.54

12.06

13.3

5.25

11.5

Sep

11.5

19.85

14.61

13.4

15.24

5.25

11.5

Oct

11.5

18.12

14.82

21.65

21.52

21.61

5.25

11.5

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Inflation Rate

Month

Inflation (Month on Month) %

Inflation (annual Average)%

Jan

5.53

6.74

Feb

5.61

6.63

Mar

6.31

6.63

Apr

7.08

6.69

May

6.87

6.65

Jun

7.03

6.63

July

6.62

6.54

Aug

5.84

6.34

Sep

5.97

6.29

Oct

6.72

6.31

Nov

7.32

6.42

Dec

8.01

 

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Conclusion

The NSE 20 Benchmark Index is trading at around the 4000 level, prices have been depressed and it is our view that pockets of value can be sought.

On the shilling, it is the general feeling that the new CBK governor has been able to stabilize it, some analysts forecast that the shilling might go down to double digits. Our view, however, is still a prudent one and one should maintain dollar denominated assets especially cash.

Our team here at Kenyan Wall Street wishes all our readers a prosperous Happy New Year and greatly appreciate your support.

Sources: (KBNS, CBK, CMA, NSE, Bloomberg, Investing.com, TradingEconomics, Kenyan WallStreet, CDSC, Company Filings)
 

 *This article first appeared on Kenyan Wall Street and is republished with its permission 

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