Kenyan market review

At the close of last week, the Nairobi Securities Exchange (NSE) recorded a 53.6% decline in turnover, amounting to $21.5 million, in comparison to the $46.2 million turnover the previous week. Additionally, trading on the secondary bond market at the NSE witnessed a substantial 61.61% decrease in activity, with $128.9 million worth of bonds traded, contrasting with the $335.9 million value of bonds transacted in the preceding week. Ann Wacera, Investment Analyst at Cytonn, joined CNBC Africa to delve deeper into the market performance and shed light on the factors influencing the recent trends. Looking at the equity market, Wacera attributed the decline in turnover to institutional investors rebalancing their portfolios at the end of the month. With the increasing prices, some investors opted to realize profits, leading to pressure on prices. In the bond market, despite a slight increase in turnover, the volatility in the equity market drove investors towards bonds. Given the diminishing yields on short-term treasuries, investors sought higher returns, prompting them to shift focus. The discussion then turned to Safari Com, the leading telco in Kenya. Following the announcement of its consortium's entry into the European market, Safari Com's share prices soared. However, recent declines have been witnessed, with investors capitalizing on earlier gains. Wacera noted that the diminishing hype has led to investors cashing in on profits, particularly as the stock was perceived as overvalued. While continued decline is expected, the correction in stock prices may balance the market. The conversation shifted to the Nation Media Group (NMG), which emerged as the top gainer last week, with a 31.01% increase in share price appreciation. Wacera linked this performance to NMG's buyback of shares, indicating market undervaluation. The ongoing buyback is anticipated to drive price appreciation, bolstered by increasing demand in the market. The analyst projected continued appreciation until the buyback period concludes in September. Moving to the banking sector, which accounted for nearly 50% of the week's traded value, attention was drawn to Absa Kenya and NCBA Group. Absa Kenya's focus on digital transformation with a significant investment underscores its potential for growth, notwithstanding its current undervaluation. On the other hand, NCBA Group, despite strong performance in Q1 2021, has initiated restructuring activities by reducing staff and closing branches. These measures are aimed at enhancing the bank's efficiency, with anticipated positive effects on future financial figures. In light of the current market dynamics, investors are urged to consider the nuanced performances of key players and adapt their strategies accordingly.