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Market Report – 26th November 2021


Faida Research - November 30, 2021 - 0 comments

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Features of the week:

MPESA App Advertising for Business

  • Safaricom is set to upgrade the MPESA app platform to enable advertising by businesses.
  • This follows an agreement by Vodacom Group (parent company) and China’s Ant Group which runs Alipay a mobile and online payment platform
  • Vodacom Group is in the process of implementing the Alipay app in South Africa and will see the advertising feature set up on the MPESA app in Kenya and Tanzania.
  • According to Vodacom management, features developed in South Africa will be launched into international markets on a case by case basis based on future agreements with Alipay.

Commentary:

  • This improves monetization on the app. However, it should be done in a such a way that it doesn’t come at the expense of the user experience.

 

Cooperative Bank receives KES 6.3 billion

  • Cooperative Bank has received KES 6.3 billion from European Investment Bank – the lending arm of the European Union
  • The credit facility, which is repayable in 7 years, will be used for lending to small businesses hard hit by the COVID-19 pandemic.
  • According to management, the loan facility will be available for up to a maximum of KES 1.5 million per customer
  • The loan facilities are expected to be deployed towards funding the acquisition of tangible assets, working capital, development of distribution networks innovation and business research.

Commentary:

We expect the loan facility to support the MSME sector as COVID-19 restrictions ease and business

Equities Market Summary:

Nairobi Securities Exchange Performance

 The All Share Index (NASI) and the NSE 20 fell by 2.2% and 0.4% w-o-w to close the week at 164.77 and 1,886.35 respectively. Equity turnover surged by 138.7% to KES 6.0 billion while the volume traded rose significantly by 139.1% to 169.4 million. We attribute the dip in the all share index to a decline in Safaricom’s price by 3.2% y/y to KES 38.00. All banks except for Absa and Coop registered price declines. Notable declines included; HF (-11.8% w/w to KES 4.32), KCB (-4.5% w/w to KES 43.85), I&M (-2.6% w/w to KES 20.90) and NCBA (-1.1% w/w to KES 23.50). We attribute the price decreases to profit taking activity. NCBA reported positive earnings (+160.0% y/y to KES 6.5 billion) for 3Q2021. DTB also registered growth in earnings (20.0% y/y to KES 4.8 billion). We opine that the new Covid-19 variant – Omnicron – may raise investor concerns over government response in terms of the resumption of stringent measures. We may see the market fall further in the coming weeks.

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