- The All Share Index and NSE 20 Index shed 1.1% and 0.2% to close the day at 128.16 and 1,794.60 respectively. Market turnover declined by 17.5% to KES 818.1 million as shares traded declined by 18.9% to 32.1 million. Safaricom was the top traded counter, accounting for 75.3% of the day’s traded value (-1.7% to KES 26.40).
- EABL declined by 2.6% (to KES 152.00) on the back of foreign sell side activity. The banking sector had shares worth KES 18.6 million transacted (2.2% of the day’s traded value) with notable price movements on Equity (-1.4% to KES 31.95), DTB (+6.2% to KES 69.00), KCB (-0.7% to KES 34.05) and Co-op (-0.5% to KES 10.50).
- Trading activity continues to be dominated by foreign investors (participation at 93.2%).
Kenya’s 1H2020 Tea Earnings Decline by KES 5.0 billion
According to the Tea directorate, earnings from tea have dipped by 8.3% y/y to KES 55.0 billion from KES 60.0 billion registered last year due to the negative impact of Covid-19.
The decline was primarily attributed to low demand, which lowered the price per kilo to KES 221.00 from KES 239.00 in 1H2019.
According to the directorate, the volume of tea exported fell by 1.0% y/y to 2.0 million kilos in 1H2020 with access to most markets being a challenge owing to the impact of the pandemic on commodity distribution and trading across the globe.
Moreover, apart from supply disruption, the pandemic has also created global economic shocks which have reduced consumer purchasing power.
Exports to both Pakistan and Egypt, Kenya’s major markets, decreased by 5.0%.
Pakistan accounted for 32.0% of total volumes exported.
We expect this to negatively impact earnings of tea producing companies which could mean lower dividend payouts.
Long Term Buy- KCB, Equity, Absa, Stanbic, NCBA
Sell- Stanchart, Bamburi, HF