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Market Report – 16th July 2021


Faida Research - July 19, 2021 - 0 comments

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Feature of the week:

EPRA Retains Fuel Prices

  • The Energy and Petroleum Regulatory Authority (EPRA), in its July review, maintained the prices of petrol, diesel and kerosene in Nairobi at KES 127.14, KES 107.66 and KES 97.85 respectively.
  • This was despite the average landed cost of imported super petrol and diesel increasing by 4.8% and 3.7% to $520.04 per cubic meter and $479.01 per cubic meter respectively.
  • According to EPRA kerosene vessels were not discharged at the port in the period.

Commentary

  • The decision to retain prices is definitely positive. Kenyans and businesses are already facing inflationary pressures. Increasing prices would have added to the pain.
  • There is a possibility that global oil supply could increase as the Organization of Petroleum Exporting Countries and partners (OPEC+) seeks to slowly increase supply following a compromise with the United Arab Emirates this week (after an initial rejection of the oil production plan by Saudi Arabia).
  • The higher supply could see the upward momentum in oil prices taper off.

Equities Market Summary:

Nairobi Securities Exchange Performance

The All Share Index (NASI) and the NSE 20 Share Index edged up by 2.0% w/w and 1.1% w/w to close the week at 178.65 and 1,972.33 respectively. We attribute the rise in the all share index (NASI) partly to gains on Safaricom which rose 3.3% w/w to KES 42.60. However, market turnover fell by 32.4% to KES 1.8 billion while the volume of shares traded also fell by 32.4% to 56.2 million shares.

Crown Paints was this week’s biggest loser (23.0% w/w to KES 20.25). We attribute this to the additional shares from the rights issue which commenced trading on 15th July 2021. The rights issue was oversubscribed by 13.7%. CIC also saw a large dip in price (22.1% w/w to KES 2.64) as result of profit taking (exacerbated by a credit ratings downgrade from GCR). There were also price declines on banking stocks such as HF (-5.1% w/w to KES 3.70), KCB (-1.4% w/w to KES 44.85), Equity (-0.9% w/w to KES 48.55) and Absa Kenya (-0.5% w/w to KES 10.00).Majority of the banking counters registered price declines. We expect more profit taking in the coming week

 

Recommendations:

EABL – Long -term buy

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