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Daily Market Report – 15th June 2020


Faida Research - June 15, 2020 - 0 comments

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Market Commentary:

  • The All share index and NSE 20 share index maintained their upward momentum, gaining 0.3% and 0.6% to close the day at 143.25 and 2,022.95 respectively. Turnover declined by 20.3% from Friday’s trading session to KES 887.8 million. Notable gainers for the day were Britam (+9.6% to KES 10.65) and Stanbic (+8.4% to KES 83.50). Foreign investors emerged bet buyers at 48.1% against the day’s sales at 45.7%. We still expect some profit taking activity on Britam and Safaricom during the week.

 

News Highlights:

 Petrol Prices Increase by KES 5.77 as Diesel and Kerosene Prices Decline

  • The Energy and Petroleum Regulatory Authority (EPRA) in its latest pump price review increased the maximum pump price of petrol in Nairobi by KES 5.77 per litre to KES 89.10 but lowered diesel and kerosene prices by KES 3.80 and KES 17.31 to KES 74.57 and KES 62.46 respectively. The prices will in force for the period between June 15th 2020 and July 14th 2020.
  • As at April 2020, local suppliers and marketers had recorded a 40.0% decline in demand for petrol and diesel citing COVID-19 travel restrictions leading to accumulation of older priced cargoes.
  • We still expect demand to remain relatively muted due to the restrictions – although we could see a slight improvement as a result of the new curfew hours.
  • For the month of June, we expect inflation to remain relatively stable as the decline in cost of kerosene and diesel (used for power generation, cooking and lighting) is expected to offer reprieve to households.
  • However from July 1, we expect continued upward revision of fuel prices putting upward pressure on inflation, attributed to:

o    Decision by Organization of Petroleum Exporting Countries (OPEC) to extend their current crude production cut (9.7 million barrels per day) by a month beyond the expiry on June 30th to July 31st. We also expect improvement in demand as countries continue to gradually ease restrictions.

o    Upward adjustment in excise duty in line with inflation. We also note that taxes and other levies are now part of the vatable amounts for petroleum products.

 

Recommendations:

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

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

 

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