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Market Report – 30th October 2020


Faida Research - October 30, 2020 - 0 comments

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Market Commentary

  • The All Share Index retreated by 0.8% w-o-w to close the week at 140.04 characterized by higher trading activity (Market turnover increased by 27.4% to KES 1.7 billion while the number of shares traded rose by 34.9% to KES 58.0 million). Market activity was predominantly foreign (foreign participation rate of 62.4%) with foreigner investors emerging net sellers in the week.
  • Investor activity was primarily focused on Safaricom (-0.3% w/w to KES 30.85), KCB (-2.7% w/w to KES 36.05), Equity (-1.3% w/w to KES 33.90) and EABL (-4.3% w/w to KES 150.25) during the week. There has been increased selling pressure in the market as uncertainty looms over whether the government will revert back to more stringent containment measures (the number of COVID-19 cases has been on the rise).
  • An extraordinary session of the National and County government coordinating summit will be convened on 4th November 2020 in light of the rise in COVID-19 infections. We expect selling pressure to persist in the coming week.

News Highlights

 

Safaricom Launches New MPESA Feature

  • Safaricom has launched a new MPESA feature – Pochi la Biashara – which allows informal business owners who lack paybills or till numbers to accept payments using their personal M-PESA lines. This feature works by separating the business funds (pochi la biashara) and personal funds.
  • This feature also adds some security since the payments cannot be reversed without approval from the business owner receiving the funds.
  • The targeted business owners include boda boda operators and food vendors. Business owners will be able to access account statements and can easily opt in and out of the service from their phones.
  • Customers making payments will also need to select the Pochi la Biashara function for business owners to receive the funds via Pochi la Biashara (this might require the company to increase awareness of the feature to both business owners and customers).
  • According to management, funds from the Pochi la Biashara will not be used to settle overdraft facilities (Fuliza). The company may need to implement measures to prevent misuse.

Commentary

  • Overall, we see this a good move in improving acceptance of M-PESA as a preferred means of mobile payments.

 

Recommendations

LONG-TERM BUY – Equity

SELL – HF

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