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Daily Market Report – 1st July 2020

- July 1, 2020 - 0 comments

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Market Commentary: 

  • The All Share Index and NSE 20 share index gained by 0.04% and 0.3% to close the day at 137.73 and 1,947.64 respectively. We note that majority of the counters recorded minimal price movements. Turnover increased by 33.8% to KES 480.5 million as the number of shares traded increased by 26.0% to 19.5 million.
  •  Kenya Airways (KQ) emerged the top gainer for the 3rd consecutive day this week (+32.4% week to date) to close the day at KES 3.60. This was on the back of speculative buy-side activity underpinned by some recent positive news about possibility of resumption of domestic and international passenger and plans on nationalization of the airline (speculation that minority shareholders may be bought out at a premium). Foreign investors remained net sellers accounting for 61.5% of the day’s sales against 35.9% of purchases.



News Highlights:

Inflation Declines to 4.6% in June 2020

 Kenya’s annual headline inflation declined to 4.6% in June from 5.3% in May 2020. The food and non-alcoholic drinks index fell by 1.3% m/m. This was owing to price decreases of food items that outweighed the increases in others. Some of the notable price declines include: tomatoes (-12.2% m/m), Irish potatoes (-5.1% m/m), cabbages (-4.8% m/m) and oranges (-4.0% m/m). Annual food inflation however rose by 8.2% y/y.
 The transport index grew by 2.1% m/m due to a 6.8% m/m rise in the price of petrol prices which offset a 4.8% m/m dip in the price of diesel.
 The housing, water, electricity, gas and other fuels’ index fell by 0.8% predominantly due to a 21.3% m/m decline in the price of kerosene.

 As some countries lift COVID-19 restrictions, we expect this to improve demand for oil and support oil prices. However, COVID-19 cases are still increasing and some users (such as international airlines) could still be restricted. We therefore do not expect demand to go back to preCOVID-19 levels any time soon. We also note that Libya may increase production from the Eastern part of Libya (talks are ongoing. Some oil fields in Libya had already re-started production but not for export) and possibly resume exporting oil. This could increase global oil supply. We expect oil prices to be relatively stable.

We expect inflationary pressures to remain muted and within the CBK’s band 5% (+/- 2.5%).



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

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

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