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Daily Market Report – 11th May 2020


Faida Research - May 11, 2020 - 0 comments

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Market Brief:

All Share Index shed 0.22 points to close at 140.65 from 140.87 as at 8th May 2020.

Market turnover declined 0.2% to KES 2.15 trillion, with a total of 16.1 million shares traded.

Foreign sells dominated the market at 92.6% while foreign buys stood at 41.9%.

KQ was the highest gainer of the day, a daily change of 9.4%, closing at KES 1.39.

The shilling remained flat at KES 106.0 to the dollar, a decline of 4.6% YTD.

 

News Highlights:

Insurers Plan COVID-19 Response

 According to the Business Daily, industry players in the insurance sector have been meeting to develop a joint response to the directive by the Insurance Regulatory Authority, that all COVID-19 claims to besettled.

 According to Mr. Tom Gichuhi, the Association of Kenya Insurers CEO, the biggest issue has been medical bills and not deaths. He added that such medical bills could top KES 1.0 million per person and maybe challenging to meet if the cases rise and pandemic persists.

Commentary
 We opine that insurers face a delicate balancing act of protecting bottom lines (ensuring only genuine claims are honoured) while safeguarding public perception and trust of the industry.

 We note that one of the reasons that insurance penetration is low (2018: 2.4%) is due to lack of trust particularly around claims settlement. Failing to honour claims may be a short-term benefit but may ultimately hurt the industry in the long term as more Kenyans avoid taking out insurance policies.

 The COVID 19 pandemic may reduce incomes and create additional expenses such as medical bills that may not be met by insurers.

 We therefore encourage our clients (including prospective ones) to build an emergency fund to cover living expenses for at least the next six to eight months. Additionally, it is advisable to invest in liquid instruments so that you can be in a position to meet any emergencies that may arise.

 

Recommendations:

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

Hold- Safaricom

Sell- Stanchart, Bamburi

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