NSE: What to Expect this Week as Foreigners Flee

NSE investors are eagerly awaiting the third quarter financial results of Kenya Commercial Bank(KCB), NCBA and Absa Bank Kenya and how the newly launched banking index will move.

This is as the Q3 earnings season for banks listed at the NSE gets into top gear. So far, strong performances have been recorded by Equity Group and Cooperative Bank of Kenya.

KCB, Absa Bank Kenya, StanChart Bank of Kenya and NCBA are scheduled to release their Q3 results this week, events that are bound to trigger heighted investor activity on these counters at the NSE.

Under sharp focus will be movements of the NSE Banking Sector Index, which tracks performance of 11 listed banks in Kenya, providing investors with a bird eye’s view of the banking sector’s performance.

Analysts have held that investors on the StanChart(SCBK) Counter have already priced several price dips that have occurred so far. The first share price dip was early this year when the lender lost its appeal case against pensioners. Then followed a profit warning alert that was issued by SCBK.

“If the earnings of SCBK go down as cautioned on the price warning another dip is inevitable,” said CFA Dedan Maina.

NCBA Share price volatility has eased with investors still stuck in the rumour phase of the alleged merger-acquisition deal-making between the Kenyan lender and South Africa’s Standard Bank Plc.

Expectations are that if positive rumours of the deal emerge out again, that will price in as positive on the NCBA Share price’. SCBK has been dealing with legal pressures around the pension dispute, which continues to drive mixed or negative sentiments on its counter at the NSE.

Performance at the NSE last week.

As at the close trading at the NSE last week, Absa Bank Kenya gained 3.31% to KSh 25, Cooperative Bank shares fell 0.10% to KSh 24.80 while KCB and StanChart shares remained unchanged at KSh 65.00 and KSh 302.50 respectively. On the other hand, the NSE Banking Index gained 0.15% to close the week at 203.61 points.

The NSE closed the week in a bearish mood as foreign investors continue to bolt for the door to reposition in the markets at home. This follows that recent end of US Federal Government shutdown, which last a record 43 days.

US stocks are already recording strong upswings triggering profit taking from foreign investors in frontier markets such as the Nairobi Bourse.

According to a Weekly Market Bulletin by Standard Investment Bank(SIB) last week saw all key indices at the NSE  down with the NASI, N10, NSE 20, and NSE 25 dropping by 2.4%, 3.2%, and 2.9%, respectively.

Market activity at the Nairobi Bourse declined slightly by O.5% to KSh3.6 billion (US$ 27.8m.)

Safaricom dominated market activity, accounting for 35.9% of the week’s NSE turnover. The counter’s share price fell 1.7% to close the week at KSh 29.00.

KCB Group, which was the second biggest mover of the week saw its share price fall by 7.1% to KSh 65.00.

Investors reacted to Co-op Bank positive Q3 earnings and a maiden interim dividend, which all pushed the counter’s share price by 8.3% to KSh 24.80 compared to the previous week’s close.

After announcing a successful subscription of its KSh 11 billion corporate bond, which was oversubscribed, EABL share price retreated by 4.2% to KSh 235.00 from the prior week’s close. BAT was also the big weekly movers table with its share price remaining unchanged at KSh 450.00.

Uchumi, one of the quiet counters, was the week’s top gainer, as speculators swamped in pushing its share price during the week 23.1% to KSh 0.48.

Flame Tree was the week’s worst performer, its price down 14.4% to KSh 1.55.

Foreign investors were profit-taking, with net outflows of US$ 3.0m. KCB Group led the buying charge, while Safaricom led the selling charge. Foreign investor activity fell to 33.5% from 37.1% in the prior week.

ALSO READ:  Co-Operative Bank Q3 Net Profit Up 12.3% to KSh 21.56B