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Market Report – 15th October 2021


Faida Research - October 18, 2021 - 0 comments

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Feature of the week:

EPRA Lowers Fuel Prices

  • The Energy and Petroleum Regulatory Authority (EPRA), in the October 2021 review, lowered the price of petrol, diesel and kerosene in Nairobi by KES 5.00 per litre, KES 5.00 per litre and KES 7.28 per litre to KES 129.72, KES 110.60 and KES 103.54 respectively
  • This was despite an increase in the average landed cost of imported super petrol by 1.7% m/m in September to $504.68 per cubic meter and a rise in diesel by 3.1% m/m to $ 557.74.
  • The average landed cost of kerosene however declined by 4.1% m/m to $477.75.
  • The prices are effective from 15th October to 14th November 2021.

 

Commentary

  • The reduction in fuel prices was owing to intervention by the government after a significant price increase by EPRA in the September 2021 review. This increase had been attributed to the removal of a subsidy program effected in April 2021 that saw subsidies worth KES 7.10, KES 9.90 and KES 11.36 per litre removed on petrol, diesel and kerosene respectively.
  • We expect the decrease in fuel prices to offer some relief to consumers. With international oil prices creeping up, it’ll be interesting to see whether the government can keep up with this program.

Equities Market Summary:

Nairobi Securities Exchange Performance:

 The All Share Index (NASI) rose by 1.7% while the NSE 20 eased by 1.1% w-o-w to close the week at 178.86 and 1,970.44 respectively. We attribute the gain in the all share index to Safaricom which edged up by 3.5% w/w to KES 43.10. Equity turnover declined by 27.3% to KES 2.1 billion while the volume traded rose by 31.4% to 54.9 million.

Majority of the counters registered price declines. Notable price declines in the week included; Britam (5.4% w/w to KES 7.64), KPLC (5.0% w/w to KES 1.70), KenGen (4.4% w/w to KES 4.57), CIC (4.3% w/w to KES 2.69), KCB (2.2% w/w to KES 45.10) and BAT (2.2% w/w to KES 435.50). We attribute this to profit taking activity. In the coming week, we expect price stability.

 

Recommendations:

KCB – Neutral

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