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Daily Market Report – 29th June 2020


Faida Research - June 29, 2020 - 0 comments

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Market Commentary:

  • The All Share Index gained marginally by 0.8% to close the day at 138.79. We partly attribute this to a rebound on Safaricom (+1.4% to KES 28.90).  Activity on the counter accounted for 38.2% of the day’s traded value. The NSE 20 index also gained marginally by 0.7% to close the day at 1,952.26. Equity turnover declined by 27.1% to KES 253.2 million. Foreign investors were net sellers with 84.3% of the day’s sales against 71.8% of the day’s purchases. There was however notable foreign investor buy side activity on Safaricom and EABL.

 

News Highlights:

 Kenya Airways Could Delay Resumption of Flights

 Kenya Airways could delay the resumption of passenger flights if forced to limit passenger numbers to ensure social distancing – as required by the Ministry of Trade.
 According to management, the airline would have to significantly increase ticket prices (60.0% to 100.0%) as it would be uneconomical to fly with the middle row seats empty in accordance with the health regulations.
 Further, the airline conducted studies through the International Air Transport Association (IATA) to determine the risk of transmission and found that the air circulation system in the planes lowers the risk of transmission due to hyper-filters.
 The IATA is therefore proposing the use of measures such as face masks as opposed to having middle seats empty, as the latter would dramatically increase air travel costs.
 The President stated last week that local flights will resume as part of an inter-county travel trial. The restriction on travel into and out of Nairobi and Mombasa is to be eased.

Commentary
 It’ll be interesting to see whether the government is willing to let up on safety measures to accommodate Kenya Airways.

 

Recommendations:

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

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

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