The Trading Room: Weekly Market Review – Week 6,2020
Increasing worries over the spread of the coronavirus took a swipe at world markets on Friday, though that wasn’t going to stand in the way of the best week for stocks since June and the strongest for the dollar since August. Europe’s trading day began with stocks down and safe-haven government bonds up, a pattern that had been set in Asia where the death toll from the virus in China has more than doubled in less than a week.
A $400 billion wipe-out on Monday, poised Shanghai for its worst week in eight months. But the other Asian indexes are ahead and the pan-European FTSEurofirst were heading for their best week since late 2016.
Oil and metal prices fell hard as the coronavirus outbreak gained pace and have been slow to recover.
Brent crude was a touch firmer on Friday at $55.17 per barrel, but is heading for its fifth back-to-back weekly drop having lost over 16% this year. A rally in copper – often seen as a barometer of global economic health because of its wide industrial use – stalled at $5,695 per tonne though it has been its strongest week since the start of December.
The Nairobi Securities Exchange experienced a rise in activity throughout the trading week closing higher in volume and turnover as compared to last week. Safaricom was the top mover during the week, accounting for 38.49%% of the total market activity.
The market had increased sale offs in the market, with sustained demand most of the counters expected to kick off release of their results in the next few days. We expect increased activity on the bank stocks to continue this coming week. There could be sustained foreign interest on Barclays & Equity Bank as prices indicate an attractive entry point for the stock in the banking sector for long term investors. Local interests is likely to push on small cap counters with Kengen being a top priority.
Data from Central Bank shows that the Kenya Shilling strengthened against major international and regional currencies during the week ending February 6, reflecting inflows to the corporate sector. It exchanged at KSh 100.39 per US Dollar on February 6 compared to KSh 100.75 on January 30. The CBK usable foreign exchange reserves remained adequate at USD 8,510 million (5.17 months of import cover) as at February 6. 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 increased by 42.6% to settle at Kes 3.57Billion against last weeks turnover of Kes 2.5 Billion with an average daily turnover at 681 Million spread across the trading week against last week’s 526 Million daily average.
Total, the Market recorded a 39.1% rise in Volumes traded week-on-week, with 97 Million shares exchanging hands against 70 Million shares transacted the previous week. The average daily volume stood at 18 Million against last week’s 12.5 Million, with Friday having the highest volume turnover of 34 Million shares valued at Kes. 1.3 Billion.
The benchmark NSE All Share Index (NASI) closed Friday at 168.65, representing a week on week gain (W/W) of 4.05%, a 4-week month to month (M/M) loss of 1.58%, and an overall year-to-date (YTD) gain of 1.35%.
The NSE 25 Share Index (NSE25) closed Friday at 4127.06 points, indicating a w/w gain of 2.58%, a 4 week month to month (M/M) gain of 0.50%, and an overall year-to-date (YTD) gain of 0.65%.
The NSE 20 share Index (NSE20) closed at 2602.36 points; indicating a week- on-week gain of 0.07%, a 4-week month to month (M/M) loss of 2.59% and a Year to date (YTD) loss of 1.96%.
NSE’s Derivatives Market (NEXT) closed the week closed the week with a total of 15 contracts worth Kes.812,000 transacted. The NSE 25 Share contract expiring in 19th March 2020 had 1 contract valued at Kes.410,000 transacted. A slight decline in activity from the 24 contracts worth Kes. 1.4 Million transacted the previous week.
The secondary Bond market at the NSE recorded a rise in market activity with 11.5 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 7.2 Billion.