Low-cost carrier Fastjet exits Kenya

Low-cost carrier Fastjet has made the decision to exit the Kenyan market after just 11 months of operation, citing low demand and low utilization of its fleet. This move comes as a surprise to many, considering the company had raised $7.5 billion from a foreign investor to invest in the East African region. However, stiff competition from larger airlines like Kenya Airways and its subsidiary, Jambo Jet, have posed a challenge for smaller carriers like Fastjet. Kenya Airways has been successful in gaining market share, with Jambo Jet even posting a profit, while Fastjet reported a loss of $2 billion. Additionally, there seems to be a perception in Kenya that the airline industry is only for the elite or upper class, which could have contributed to the low demand among lower-end consumers. This decision by Fastjet raises questions about the viability of the airline industry in Kenya and its attractiveness to potential investors moving forward. On the other hand, London Stock Exchange-listed gold explorer Acacia Mining has increased its 2017 exploration budget for Kenya to $11.8 million, signaling a significant commitment to expanding drilling activities in the country. Acacia Mining is strategically positioned to explore not only in Kenya and Uganda but also in the wider Central African region, with plans to venture into minerals in the Democratic Republic of Congo and Rwanda. While specific details about their findings are still limited, the increased budget underscores their confidence in the potential mineral reserves in Kenya and neighboring countries. As the market performance in Kenya continues to fluctuate, investment analysts are keeping a close eye on trends and shifts. With 18 out of 64 counters recording no activity at market close, focus is turning to large-cap counters like Safaricom and banks that show strong cash flow generation and high dividend yields. The banking sector, in particular, is expected to see increased activity as some undervalued banks attract investor attention. However, some companies like Uchumi, which saw a 4.76% increase in share price, still face challenges with negative equity positions and uncertain strategic investments. In the realm of government securities, Kenya is experiencing a shift as both local and foreign investors show interest in the deep and liquid secondary market. With a growing demand for government securities across the East African region, Kenya is poised to outperform in this sector. Foreign investors are keen on Kenya's market due to its stability and potential for profitable exits. This trend indicates a shift towards treasury bills and long-term papers, signaling a more secure investment environment in the country. Overall, the exit of Fastjet from the Kenyan market highlights the challenges faced by smaller airlines in competing with larger carriers like Kenya Airways. Acacia Mining's increased exploration budget signals a positive outlook for the mining sector in Kenya and the region. As market dynamics continue to evolve, investors and analysts are closely monitoring developments in various sectors to capitalize on emerging opportunities and navigate potential risks.