2022 Week 36: Market Cap Trainers Summary

Equity Market

• The all-inclusive NASI share price index increased by 2.63% from 138.01 to 141.64 during the week ending September 09.
• The NSE 20 share price index increased by 1.37% from 1763.40 to 1787.48 during the week ending September 09. 
• The NSE 25 share price index increased marginally by 2.09% from 3,268.91 to 3,337.35 during the week ending   September 09.

CORPORATE ANNOUNCEMENTS AND KEY EVENTS FOR THE LAST WEEK AND CURRENT WEEK

• In the Treasury bills auction of September 08, the government sought to raise KES 24 billion but received bids totalling KES 36.72 billion representing a subscription rate of 152.99% percent, an increase from 128.80 percent  recorded last week. Amount accepted amount to KES 27.95 billion.  Interest rate on 91-Day Treasury bill, 182-Day Treasury Bill and 364-Day Treasury bill was 8.910%, 9.599% and 9.915% respectively. The subscription rates across the three papers were 675.37%, 62.27% and 34.76% respectively.
•   The bond market reported decreased activity with bonds worth KES 16.50Bn transacted compared to KES 19.70Bn registered the previous week.
• The National Treasury plans to raise KES 50.00 Billion from auction of two reopened bonds FXD1/2022/10-(9.6 years) and FXD1/2022/15-(14.5 years). They are currently paying interest of 13.490% and 13.942% respectively. Period of sale is from 25 August 2022 and 13 September 2022.
• The supreme court of Kenya upheld President William Samoei Ruto in the general election held in 9 August 2022. This paves way for his ascent to office on 13 September 2022. This brings to an end political uncertainty and the stock market rebounded positively to this development with the NSE gaining KES40Bn on 5 September 2022 the day the announcement was made.
•  Banks are gradually shifting to risk based lending with at least half of the banks having received approvals for the risk based loan pricing formulas. We opine that currently reason for reluctance to implement the risk based loan pricing formulas is the risk of losing customers with banks that have not received approvals still charging lower interest rates.
•  International Finance Corporation is buying a 15.46% stake in Safaricom Ethiopia for KES 19Bn.This effectively values Safaricom Ethiopia at KES 122.90Bn. This will see Safaricom stake reduce to 47% and it will affect the way Safaricom accounts for its Ethiopian subsidiary since it will now become an associate company. With IFC on board, Safaricom is likely going to find it easy to access funding since it intends to finance Ethiopian venture mostly by the use of debt financing.
•  Jeremy Awori is set to leave as Managing Director of Absa Kenya from 31 October 2022 after serving the bank for ten years. He is leaving to join ECO Bank as CEO to see operation in 36 African countries.
• Also during the week, Stanbic Bank released its monthly Purchasing Manager’s Index (PMI) highlighting that the index for the month of August 2022 declined for the fifth consecutive time to 44.20, from 46.30 recorded in July 2022 pointing towards a further deterioration in the business environment in the Kenyan Private Sector.
• As per data provided by the CBK, amount transacted on M-PESA hit KES 722.52Bn for the month of July 2022 with number of M-PESA agents standing at 309,856.Registered  mobile money subscribers totalled 71.58 million as at July 2022. Total amount transacted using M-PESA totalled KES 4.56 Trillion for the first 7 months of the year equivalent to 37.69% of Kenya’s Gross Domestic Product (KES 12.10 Trillion in 2021). 

As per data provided by the communication Authority of Kenya for Quarter Three ended 31 March 2022, 99.93% of the mobile transactions in value (KES 6.91 Trillion) was transacted using Safaricom M-PESA. Safaricom M-PESA agents stood at 262,004 as per 31 March 2022.

When the two data sets are compared, since Communication Authority of Kenya data excludes Equitel transactions, then the logical conclusion to draw is Safaricom M-PESA controls around 69.07% of all the cash in cash out mobile money transactions in Kenya.

• As per CBK statistics amount transacted using various cards of which 92.72% (11.33 million)are debit cards amounted to KES 60.86 Bn for the month of July 2022 with number of cards standing 12.22 million. Total amount transacted using cards amounted to KES 419.13 Bn for the first 7 months of the year. This is equivalent to 9.19% of the total amount transacted using mobile money for the first 7 months.
• As per the Central Bank of Kenya second quarter 2022 quarterly economic review, the Kenya Electronic Payment and Settlement System (KEPSS) used for large value Real Time Gross Settlement (RTGS) moved a volume of 3.41 million transaction messages worth KES 18.30 Trillion in the first half of 2022. This is nearly 4.77 times the amount transacted using mobile money in the first half of 2022 ( amount transacted by mobile money agents was KES 3.84 trillion for the first 6 months of 2022).

LOCAL MARKET SUMMARY FOR WEEK ENDED 09 SEPTEMBER 2022