The Trading Room: Weekly Market Review – Week 11, 2020
The longest bull market in global markets history came to a sudden end this week, punctuated by a Thursday selloff that was the steepest one-day fall since the October 1987 stock market crash, driven by fears the COVID-19 pandemic will push the global economy into recession.
If you thought the stock-market selloff was ugly, take a look at an oil price chart. Crude oil on Monday dropped 25% for the biggest single-day drop since the Gulf War in 1991 in a global battle for market share and closed further lower on Friday posting their biggest week of losses since the 2008 global financial crisis, rocked by the coronavirus outbreak and efforts by top exporter Saudi Arabia and its allies to flood the market with record levels of supply triggering an oil price war.
All S&P 500 sectors fell sharply, but energy shares performed worst as oil prices tumbled. Health care, technology, and communication services shares held up best. As companies and individuals continued to cancel travel and events, shares in the affected industries were dealt the heaviest blow. Some cruise ship shares shed roughly half of their value as of the previous week at their Thursday lows, and airline shares accelerated their declines following President Donald Trump’s announcement of a 30-day ban on travel from most of Europe to the U.S.
|Friday’s Close||Week’s Change||% Change YTD|
|S&P MidCap 400||1,546.65||-251.22||-25.03%|
Local markets had a rough week, the Nairobi Securities Exchange closed on the red after the NSE20 share index closed 5% lower leading to a market halt on Friday. Week on week, the exchange had the lowest positive activity sine the 2008 crash. The last time the NSE had a halt was after Kenya’s supreme court annulled the presidential election results. The All share index continued to record new all time low, declining by 14.41% week on week. Banks had a little retained interest on the grounds of earnings reports; KCB & Stanbic have so far released their results. This week the market expects analysts from the Co-operative bank of Kenya to release their results on Tuesday.
Week on week, the market closed with the highest weekly turnover since the year began at 5.45 Billion, this is was a 41.56% rise in turnover as compared to last week’s 3.85 Billion. Likewise, volumes traded on the market recorded a 68.6% rise in volumes with 189M shares exchanging hands against 112M shares traded the previous week. Stanlib’s Fahari Income REIT topped the weeks gainers with a 12.24% rise in value, closing at Kes. 8.80 from the 7.84 marked last week Friday, this was followed by Coffee producer Eagaads Limited at 10.00% and Sasini Plc at 4.46%. On the decline, Kenya Airways Plc had the worst decline in years, hitting an all time low of 1.69 per share, KQ dropped 17.96% in price value, KQ is in aviation business which has been marked globally as one of the most exposed sectors in terms of effect on the COVID-19 pandemic after the tourism sector. KQ’s loss on the bourse was followed by Sanlam Kenya (17.94), Safaricom Plc (17.46) and British American Tobacco (16.53%)
In the coming week, we expect the bear run to open Monday but only for a short while. The market volatility will definitely be heghtened further if the country reports any new corona virus cases. With Rwanda already taking the shock and closing schools, Kenyan Authorities have assured the public that the virus will be contained. Cooerative bank may have a slight price retainer at current levels or even higher as market anticipate a better result from the company that’s now looking to buy Jamii Bora Bank.
Here’s how the NSE Indices performed during the week:
- The NSE 20 share index was down 275.78 points or 11.49% to settle at 2124.78.
- All Share Index (NASI) ended the week 22.51 points lower or 14.41% to settle at 133.66.
- The NSE 25 Share index shaved-off 537.61 points or 13.87% to stand at 3337.61
- The FTSE Kenya declined by 22.58 points or 14.74% to close Friday at 184.10
The Derivative Market closed the week with a total of 16 contracts worth Kes.547,000 transacted. The KCB contract expiring in 19th March 2020 had 6 contracts valued at Kes.273,000 transacted. This was a decline as compared to the 17 contracts worth Kes.788,000 transacted the previous week.
The secondary Bond Market registered reduced activity with bonds worth Kes.15.5Bn transacted compared to Kes.18.9Bn registered the previous week. The FTSE NSE Kenya Govt. Bond Index closed the week at 96.55 basis points.