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The Trading Room: Weekly Market Review – Week 5,2020.

Shares in global markets probably had their biggest weekly losses since August 2019. Commodities like oil and metals markets were not left out, showing an even more brutal damage to profits earned as investors increasingly got worried over the fallout from China’s coronavirus epidemic. The virus, which is centered on China, has spread to more than 20 other countries and regions. As of Friday China had reported 213 deaths and 9,800 cases, with number of people infected surpassing the total during the 2002-2003 SARS epidemic.On Thursday, the World Health Organization declared a public health emergency, after declining to do so the previous week.

Crude oil prices dropped below $60 a barrel for the first time in nearly three months, while gold prices surged one percent to a nearly three-week high before paring gains.

Wall Street’s S&P 500 futures were down 0.5% ahead of the New York restart having been briefly higher overnight. That was given a boost when Amazon’s sales blew past forecasts and sent its stock soaring 11% after hours, adding over $100 billion in market value Safe-haven bonds were well bid, with yields on U.S. 10-year Treasuries down 9 basis points for the week so far and near four-month lows.

In currencies, sterling extended gains after jumping on Thursday when the Bank of England confounded market expectations by not getting anywhere near an interest rate cut. The pound was last up 0.3% at $1.3119, a relatively perky performance given that yesterday was the day the UK officially left the European Union after 47 years of being a member of Europe’s largest economic block.

The Nairobi Securities Exchange experienced a decline in activity throughout the trading week,a reflection of investors on global markets on the scare of Coronavirus, closing lower in volume and turnover as compared to last week. The banking & Telecommunication stocks continued to dominate market activities during the week, accounting for 86.4% of the total market activity.

The stock market had sustained sale offs in the market, with sustained supply on the market and low demand. We expect the sale on Equity Bank & Bank of Kigali Group at price levels of Kes 49.50 and 22.50 respectively, to continue this coming week. There could be sustained foreign interest on KCB Group as prices indicate an average entry point for the stock in the banking sector. Local and foreign interests is likely to be retained on Safaricom. We could also see interest in East African Breweries Limited as investors take position on the Kes.3.00 dividend announced by the company during yesterday’s results release..

The Kenya Shilling remained stable against major international and regional currencies during the week ending January 30. It exchanged at KSh 100.75 per US Dollar on January 30, compared to KSh 100.87 on January 23.The CBK usable foreign exchange reserves remained adequate at USD 8,500 million (5.20) months of import cover) as at January 30. 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 10.71% to settle at Kes 2.5 Billion against last weeks turnover of Kes 2.8 Billion with an average daily turnover at 526 Million spread across the trading week against last week’s 604 Million daily average.

Total, the Market recorded a 23.6% decline in Volumes traded week-on-week, with 70 Million shares exchanging hands against 91.6 Million shares transacted the previous week. The average daily volume stood at 12.5 Million against last week’s 17.3 Million, with Thursday having the highest volume turnover of 17.9 Million shares valued at Kes. 698.9 Million.

The benchmark NSE All Share Index (NASI) closed Friday at 162.33, representing a week on week loss (W/W) of 1.75%, a 4-week month to month (M/M) loss of 3.15%, and an overall year-to-date (YTD) loss of 3.15%.

The NSE 25 Share Index (NSE25) closed Friday at 4021.36 points, indicating a w/w loss of 1.28%, a 4 week month to month (M/M) loss of 0.05%, and an overall year-to-date (YTD) loss of 1.88%.

The NSE 20 share Index (NSE20) closed at 2602.01 points; indicating a week- on-week loss of 1.59%, a 4-week month to month (M/M) gain of 0.06% and a Year to date (YTD) loss of 2.03%.

The NSE20 Share Index One Year performance chat. [Data by Investing.com]
The NSE Year on Year (Y-O-Y) share price performance.

NSE’s Derivatives Market (NEXT) closed the week with a total of 24 contracts worth Kes.1.4M transacted. The Equity contract expiring in 19th March 2020 had 10 contracts valued at Kes.517,000 transacted. An impressive rise in activity from the 8 contracts worth Kes. 253,000 transacted the previous week.

The secondary Bond market at the NSE recorded a rise in market activity with 7.2 Billion worth of bonds transacted, indicating a continuous decline in activity in value in the fixed income segment as compared to last week’s value of 10 Billion.

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