NSE Weekly Market Review – Week 46, 2020
Activity on the Nairobi Securities Exchange took a downturn during the week as investors looked to the banking counters results, the market however remained bullish as buyside investors outweighed their sale side counterparts on the market.
The All Share Index of the Nairobi Securities Exchange (NASI) gained by 0.63% during the week to close at 143.93. The NSE20 Index added a weekly gain of 1.13% while the NSE25 share index declined 2.51% to close the week at 1,789.52 and 3,280.73 basis points respectively. The NSE 20 and the NSE25 share indices have shed up-to 32.58% and 19.99% respectively in year to date performance
Market capitalization of the NSE was at higher, posting an 1.85% rise to Kes.2.21 trillion against the previous week’s closing valuation of Kes 2.17 trillion, backed by the increase in prices of the major counters in the banking sector and increased activity on Safaricom Plc.
Safaricom Plc rose by 1.60% to Kes.31.80, up from Kes.31.30 registered the previous week with shares valued at Kes.978 million transacted, representing 47.13% of the week’s traded value while the banking Sector followed closely with shares worth Kes.732 million transacted which accounted for 35.27% of the week’s traded value. Equity Group Holdings Plc rose by 5.14% to Kes.36.80, up from Kes.35.00 registered the previous week with shares worth Kes.272 million transacted. KCB Group up 5.34% to Kes.37.50 moved 5.5 million shares valued at Kes.207 million.
During the week, KCB Group announced its 3Q20 earnings marking a 43.2%y/y slump in EPS to KES 3.39. Given that the NBK subsidiary was amalgamated into the Group in the 4Q19, a like-for-like comparison for the respective periods indicates a 44.3%y/y slump in earnings. The decline was primarily driven by the explosion in loan impairment costs (+244.3%y/y); as the Group’s asset quality deteriorated (210bps q/q increase in NPL ratio to 15.2%) due to the pandemic. Consequently, the lender’s cost of risk remained elevated at 4.8% – a trend we expect to carry on in FY20 and FY21 as the current tough macros persist in the medium term.
Equity Group Holdings published its 3Q20 earnings, registering a 14.6%y/y decline in EPS to KES 3.93. The earnings do include the numbers from its newest subsidiary (BCDC) which it acquired in the quarter (August 2020). For purposes of an apples-to-apples comparison, we have stripped off the BCDC numbers from the equation, so as to get a better understanding of the Group’s performance vis-à-vis 3Q19. In that regard, the lender’s EPS slumped 20.4%y/y to ~ KES 3.66; driven by the 673.7%y/y explosion in loan impairment charge to KES 14.7bn; as the lender downgraded some loans to Stage 2 and 3, due to increases in the probability of default. In view of that, the cost of risk jumped to 5.1% in 3Q20 vis-à-vis 4.2% recorded in 1H20.
The Derivatives Market of the Nairobi Securities Exchange closed the week higher, with a total of 20 contracts valued at Kes.655,000 concluded as compared to the 17 contracts valued at Kes.534,000 concluded in the previous week.
The secondary trading on the bond market saw a moderate growth in activity with bonds, posting a 26.7% rise in turnover with bonds valued at Kes.9.5 billion billion traded against the Kes 7.5 billion worth of bonds achieved in the previous week.