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Daily Market Report – 4th June 2020


Faida Research - June 4, 2020 - 0 comments

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Market Commentary:

  • The All Share Index (NASI) gained for the third consecutive day this week (+1.8% week to date) to close the day at 139.59. We attribute this mainly to Safaricom (+1.7%), EABL (+0.5%), Co-op Bank (+2.4%). Other notable gainers included Standard Chartered Bank (+6.3%) and Centum (+4.6%).
  • The NSE 20 index however retreated marginally by 0.3% to close the day at 1931.18. We note that majority of the constituent counters lost during the day which may explain the decline in the index. Daily turnover rose by 41.2% to KES 596.0 million. Foreign investor activity was biased to the sell side at 65.6% compared to the buy side at 44.2%. However, local participation increased to 45.1% from 27.1% in the previous day.

 

News Highlights:

Inflation Eases to 5.5% in May 2020

 Kenya’s annual headline inflation eased marginally to 5.5% in May from 5.6% in April 2020.
 The food and non-alcoholic drinks index grew by 0.9% m/m. This was attributed to a rise in the price of food items that offset the decline in others.
 Some of the notable price increases include: onions (+4.5 m/m), carrots (+3.3% m/m), oranges (+2.6% m/m) and spinach (+2.2% m/m). We note however that the May m/m growth in the index was much lower than that recorded in April (1.8% m/m).
 The transport index rose marginally by 0.02% m/m despite prices of diesel and petrol prices falling by 19.1% and 9.8% respectively during the month as the Energy and Petroleum Authority (EPRA) lowered prices in its May fuel review. However, the May m/m growth in the index was also lower than the April m/m growth (0.1%).
 The housing, water, electricity, gas and other fuels’ index increased by 0.8% predominantly due to a 3.2% m/m rise in the price of kerosene. Globally, weaker demand for oil has seen international prices for crude oil (and processed products) decline significantly.
 We expect inflation to remain within the CBK’s band 5% +/- 2.5% as demand pressures remain muted (this may signal lower economic activity if it is sustained).

 

Recommendations:

Long Term Buy- KCB, Equity, Absa, Stanbic, NCBA

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

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