The Stock Market
The NSE20 bounced back 9.52 points to close at 4023 as foreign investors trooped back into the market. The number of shares traded in today's session edged up by 29.4% to stand at 22mn while turnover was up by 3.3% to stand at Ksh402mn.
Fixed Income, Commodities and Forex.
In the fixed income market yields on T-Bills continued their upward momentum, yields on the 3 month T-Bill at today's auction edged up by 47.5bps to stand at 9.437% at an under subscribed auction. Yields on T-Bills have been rising up despite inflation falling to 5.3% in September on tight liquidity. The Central Bank of Kenya (CBK) has been mopping up the Shilling from the system via repurchase agreements also known as Repo's, to entice banks to participate in the mop ups, CBK has been offering rates has high as 10%. Despite the CBK's heightened Open Market Operations (OMO) the Shilling slipped by 0.16% against the green back to trade at 85.252 and now points to 90 against the greenback before year end,since I expect a liquidity surge due to maturing bonds in the coming month and money supply, increased insecurity in Kenya's coastal regions and low interest rates to weigh negatively on the Shilling.
Kenya Commercial Bank Ltd. (KNCB), touched a 4 year high today. The stock rallied 0.8% to close at Ksh28.50 Here is a recap of an interview I did with Bloomberg on what could be driving the stock higher.
Earnings per share in the 12 months through December could grow as much as 17 percent to 4.337 shillings a share, Davis Mika, an analyst at Nairobi-based Contrarian Investing Kenya Ltd., said by phone today.
“It is mostly influenced by efficiency gains out of the restructuring which they carried out last year,” he said. “Especially staff costs have declined, impacting their bottom line positively, and I expect loan uptake to increase after they reduced their base lending rate.”
KCB on Sept. 14 said it would reduce its base loan rate to 19 percent from 22.5 percent starting Oct. 1. First-half profit climbed to 6.09 billion shillings ($71.5 million) from 4.06 billion shillings a year earlier, as income from loans increased and earnings from regional operations surged.