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Daily Market Report – 4th August 2020


Faida Research - August 5, 2020 - 0 comments

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Market Commentary:

  • 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%).

 

News Highlights:

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.

Commentary
 We expect this to negatively impact earnings of tea producing companies which could mean lower dividend payouts.

 

Recommendations:

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

Hold- Safaricom

Sell- Stanchart, Bamburi, HF

 

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