Global Markets

The Trading Room: Weekly Market Review – Week 4,2020.

Just one week after showing stability, the spread of a new virus (corona virus) from China to other countries has raised fears that it could impede growth. Reacting to memories of the short-lived economic damage done by the SARS virus in 2002-2003, equities markets worldwide retreated this week. The virus has prompted the suspension of public transport in 10 Chinese cities. Health authorities fear the infection rate could accelerate over the Lunar New Year holiday this weekend, when millions of Chinese travel to their homes and abroad.

Pharmaceutical stocks in India, China & Europe surged as investors took the best position in companies that could hopefully supply china with the medical support on the deadly virus as the country started to build a 1000-bed hospital in 5 days. For now,markets are waiting to see whether or not (the coronavirus) has a material impact on growth, and that’s hard to judge at the moment.

MSCI’s gauge of stocks across the globe gained 0.26%. The pan-European STOXX 600 index rose 1.13% following slight gains in Japan and Asia. On Wall Street, the Dow Jones Industrial Average rose 98.95 points, or 0.34%, to 29,259.04, the S&P 500 gained 4.47 points, or 0.13%, to 3,330.01 and the Nasdaq Composite added 38.29 points, or 0.41%, to 9,440.77.

As investors took a  bet on riskier assets, some safe havens such as the Japanese yen and gold dipped.The yen fell a sliver to 109.60 yen against the dollar, off two-week highs of 109.26 touched on Thursday. Gold fell 0.3%. Benchmark US 10-year notes last rose 6/32 in price to yield 1.7203%, from 1.739% late on Thursday.

Listed Stocks on the Nairobi Securities Exchange experienced a slow in activity throughout the trading week, closing lower in volume and turnover as compared to last week. The banking & Telecommunication stocks dominated activities during the week, though lower than the previous week, accounting for 77.19% of the total market activity, a replication of global markets scare this week on China’s corona virus.

Generally, the listed stocks had increased sale offs in the market with higher supply on the market as investors backed on profit taking. We expect an increase sale on Equity Bank next week as foreign interest is retained on KCB Group in the banking sector, retained prices on Safaricom Plc could come in with possible rise in demand by foreigners as more investors take position to dividend gain.

The Kenya Shilling remained stable against major international and regional currencies during the week ending January 24. The CBK usable foreign exchange reserves remained adequate at USD 8,496 million (5.20) months of import cover) as at January 16. This meets the CBK’s statutory requirement to endeavor to maintain at least 4 months of import cover, and the EAC region’s convergence criteria of 4.5 months of import cover

The Nairobi Securities Exchange‘s trading week’s Week on Week (w-o-w) turnover declined by 30% to settle at Kes 2.8 Billion against last weeks turnover of Kes 4.0 Billion with an average daily turnover at 604 Million spread across the trading week against last week’s 728 Million daily average.

Total, the Market recorded a 6.05% marginal increase in Volumes traded week-on-week, with 91.6 Million shares exchanging hands against 97.5 Million shares transacted the previous week. The average daily volume stood at 17.3 Million against last week’s 18.5 Million with Thursday having the highest volume turnover of 23.7 Million shares valued at Kes. 756 Million.

The benchmark NSE All Share Index (NASI) closed Friday at 164.98, representing a week on week loss (W/W) of 0.75 %, a 4-week month to month (M/M) loss of 0.41%, and an overall year-to-date (YTD) loss of 0.86%.

The NSE 25 Share Index (NSE25) closed Friday at 4075.32 points, indicating a w/w loss of 0.65%, a 4 week month to month (M/M) gain of 0.46%, and an overall year-to-date (YTD) loss of 0.62%.

The NSE 20 share Index (NSE20) closed at 2642.50 points; indicating a week- on-week loss of 1.00%, a 4-week month to month (M/M) gain of 1.16% and a Year to date (YTD) loss of 0.45%.

The NSE Year on Year (Y-O-Y) share price performance.

NSE’s Derivatives Market (NEXT) closed the week with a total of 8 contracts worth Kes.253,000 transacted, a decline in activity from the 19 contracts worth Kes. 830,000 transacted the previous week.

The secondary Bond market at the NSE recorded a rise in market activity with 10 Billion worth of bonds transacting, another decline in activity in value as compared to last week’s value of 11.2 Billion.

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