Kenyan stocks fare well ahead of MPC decision

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Kenyan stocks fare well ahead of MPC decision

A number of Kenyan stocks have been doing well on the back of the Monetary Policy rate decision later today.

Oil company KenolKobil’s share price dropped 7 per cent yesterday following the exit of marketing manager Jacob Segman, who had been a part of the company since 1990. Despite the drop KenolKobil is still one of the most valuable stocks on the Kenyan bourse.

“A lot of the action that we’ve seen on the share price is just a reflection of the market’s sentiment of the performance in the particular year,”Centum Investments research analyst Evans Mugi told CNBC Africa on Tuesday.

“One thing you have to note is the share price of KenolKobil is strongly related to the price of oil in the global markets so sometimes when you see that sort of decline in the general global oil price then again you see it following through on the share price as well. I think the most recent knock on the price we’ve seen is really a reaction to just the sort of changes that are taking place in the board.”

KenolKobil has a number of outlets both in Kenya and regionally, which makes them a strong entry point into Africa. Foreign investor activity in the oil company has increased significantly in the past two days, with 67 per cent of the market activity coming from foreign investors from 61 per cent in its previous trading session. There are however active net sellers of Safaricom and Kenya Commercial Bank stocks.  

“You also have to look at whether this is new money or whether this is just money sort of shifting from one particular position to another. In as far as the selling activity that we’ve been seeing, it’s really been more of profit taking,” added Mugi.

Kenya’s mid-tier banks are also garnering substantial attention, with banks such as CFC Stanbic Bank and Diamond Trust Bank now among the contenders expected to show significant development and translates to even faster loan growth.

“From your marginal investor perspective, I think mid-tier banks will probably do well within the next two quarters. By the fourth quarter you should see some significant pickup in loan growth from this particular segment,” said Mugi.

Diamond Bank in particular have not however been aggressive enough in growing their retail deposit and loan books but are nonetheless expected to fare a lot better than other banks in the vent of volatility in the country’s banking sector.