- The All Share Index gained 1.1% to close the day at 140.74 from the previous trading session. This was attributed to Safaricom gaining by 1.4% (foreign buying interest), accounting for 67.0% of the day’s traded value. The NSE 20 Index also gained by 1.5% to close the day at 1,968.42 as majority of the counters posted price gains. Notably, foreign investors emerged net buyers for the day’s trading session (92.7%) against foreign sales at 47.1%. We expect to see an increase in market activity for the week.
Government Extends COVID-19 Containment Measures
On June 6th 2020 the government extended some of the measures put in place to contain the spread of the COVID-19 virus for a period of 30 days. These included the cessation of movement in and out of the expanded Nairobi Metropolitan Area, Mandera and Mombasa counties, the ban on public gatherings and the nationwide dusk to dawn curfew. However, the curfew commencement and end times were varied from 7:00 PM – 5:00 AM to 9:00 PM – 4:00 AM. Additionally, cessation of movement in and out of Kilifi and Kwale counties (government noted that infections were declining), Mombasa Old Town and Nairobi’s Eastleigh Area was not extended.
The government’s decision to extend some of the measures was based on the findings that the following “bare minimum” conditions for a re-opening had not been met (1) Containment of the spread and a decline of infections (2) Adequate health care infrastructure to handle testing, isolation& quarantine and a surge in infections and (3) Capacity for surveillance and contact tracing
The government, however, hinted at a progressive gradual reopening. For instance, public gathering in places of worship could be allowed after necessary protocols are put in place. Also, re-opening of schools is expected from 1st September 2020.
We agree with the government’s decision to extend some the measures. This will allow for more consultation on additional measures (for instance around intercounty travel) that need to be in place before easing some of the current ones and allow time for putting in place the necessary health care infrastructure particularly in the counties (government has disbursed KES 5.0 billion for this). We also note that the government is looking at home based care to complement the health care infrastructure. Easing restrictions prematurely without having the resources (e.g. the healthcare workers) first for home-based care and without sensitizing the public on the same would have reduced its effectiveness
However, there is need for increased mass testing. The government should come up with ways to incentivize the public (like it has done for the hospitality sector) to volunteer for mass testing. The incentives do not need to monetary and could be better quarantine/isolation conditions or an option for home-based care. There have been reports of the public giving the wrong contacts in fear of being quarantined.
In our view, given the government’s expectation of an August -September peak of the infections, there is a possibility that some the measures (especially on cessation of movement) may be retained beyond the current 30 days.
The easing of some the restrictions is a welcome move for businesses and households. We expect businesses to extend working hours in line with the new curfew hours.
Long Term Buy- KCB, Equity, Absa, Stanbic, NCBA
Sell- Stanchart, Bamburi, HF