- Surviving era of profit warnings and price losses
- Powered to fail: The paradox of big projects, excess power and high power costs
- Four Digital Trends Changing the Banking Industry
- Silver lining in the Safaricom split narrative
- Equity Bank is strong but with an Achilles heel
- Safaricom: Value Investing Against Bear Runs
- PesaLink: the silver lining in bank stocks
- Ditch that Merry-Go-Round Club Now
- Weak shilling, subdued market, great opportunity!
- Investing Through NSE Bear Runs
- Is there Hope for Kenya Airways?
- REITS 101: A Premier on Real Estate Investment Trusts
- The Leading Supplier of CO2 in East Africa
- Atlas Development Support Services - Why Ethiopia?
- A brief on Equity Group Holdings
- The Potential of Kengen
- Part 9: Being a Good Company Does'nt Mean Being a Good Stock
- Why you should accumulate Safaricom shares
- Part 8: Buy the Rumour, Sell the Fact
- Part 7: You Can't Go Broke Taking a Profit
- Part 6: A Paper Loss Is Not a Loss
- Part 5: If Institutional Investors are Buying, Then The Stock Must Be a very Good
- Part 4: Cut Your Losses and Let Your Profits Run.
- Part 3: Buy the Stock That Splits
- Part 2: The Stock Market Rises as the Bond Market Falls
myStocks Blog & Market Commentary
The Central Bank of Kenya proposes to issue a new Infrastructure Bond IFB1/2011/12 on 3rd October 2011. This is the 5th Infrastructure Bond being issued by the CBK.
Overnight interest rates went on a roller coaster ride in August, rising from 6.7% on 10th August to a high of 28.40% on 26th August and then down below 6% by 9th September. In our last month's newsletter we had forecast that our Pessimistic scenario of interest rates was starting to play out and that the 91-day Treasury bill would rise to 11-12% in the next few months.
In the statement issued by the Monetary Policy Commitee (MPC) following their meeting, the committee noted that "the market had confused the role of the CBK Overnight Window rate as a signal of monetary policy". Further it was clarified that the "Overnight Window Rate" was in fact an outcome of the CBR, a penalty, and a measure of market tightness
The Monetary Policy Committee (MPC) held a special meeting on 14th September 2011. The meeting had become necessary as the previous actions of the MPC this year had been largely ineffective, and the Central Bank of Kenya (CBK) had been forced to take a number of measures between the MPC meetings in order to stabilize markets.
The market was impacted by the uncertainty in global markets - the debt crisis in Greece and other European countries, the stand-off in the US regarding the debt ceiling and the downgrade of US Government debt by Standard & Poor. The NSE All Share Index fell to 76.14 on 25th August 2011, down 22.16% points from the beginning of the year and down 9.70% points from the beginning of the month.
In our July newsletter, we had given our opinion that the Monetary Policy Committee of the CBK should have increased the Central Bank Rate (CBR) in its July meeting, and that the appropriate rate was at least 8%, instead of leaving the rate unchanged at 6.25%. On 12th August, the Central Bank once again reverted to a tight monetary policy stance, just 2 weeks after indicating that they did not believe tight policy stance would have the desired result.
The Monetary Policy adopted by the Central Bank of Kenya (CBK) since January has been sending conflicting and contradictory signals. At the Monetary Policy Committee (MPC) meeting held on 27th July, the Central Bank Rate (CBR) was left unchanged at a level of 6.25%, much against market expectations of an increase of 0.25% to 0.50%. We have tabulated below the observations and the policy actions taken on the monetary policy front since January 2011.
Inflation has increased for the ninth straight month in July, bringing renewed pressure on the Central bank to tighten its monetary policy. Inflation may slow to between 8 percent and 9 percent by the end of the year if the central bank raises rates, while failure to tighten monetary policy may keep the inflation rate above 12 percent.
In our previous newsletters, we have highlighted that the prices and yields of secondary market trades reported at the Nairobi Stock Exchange (NSE) are at artificial prices, and not reflective of the market, as a majority trades are taking place at grossly inflated prices.
In March and April we had given our stock picks I&M Bank (unlisted), Kenol Kobil (KENO) and Total Kenya (TOTL) - we revisit these stock picks in this newsletter.
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IndicesNSE 20-Share IndexNSE 25-Share IndexNSE All-Share IndexZamara Kenya Equity Index…Zamara Kenya Equity Index…
AgriculturalEaagads LtdKakuziKapchorua Tea Kenya PlcLimuru Tea Company LtdSasini Tea and Coffee LtdWilliamson Tea Kenya Plc
BankingBarclays Bank LtdBK Group PlcCo-operative Bank of Kenya…Diamond Trust Bank Kenya LtdEquity Group Holdings LtdHF Group LimitedI & M Holdings PlcKenya Commercial Bank LtdNational Bank of Kenya LtdNIC Bank LtdStanbic Holdings PlcStandard Chartered Bank…
Commercial and ServicesDeacons (East Africa) PLCEveready East Africa LtdExpress LtdKenya Airways LtdLonghorn Kenya LtdNairobi Business Ventures…
Construction and AlliedARM Cement LtdBamburi Cement LtdCrown Berger LtdEast African Cables LtdEast African Portland Cement…
Energy and PetroleumKenolKobil LtdKenya Electricity Generating…Kenya Power and Lighting LtdTotal Kenya LtdUmeme Limited
InsuranceBritam Holdings LtdCIC Insurance Group Ltd
InvestmentCentum Investment Company…Home Afrika LtdKurwitu Ventures LtdOlympia Capital Holdings LtdTrans-Century Ltd
Investment ServicesNairobi Securities Exchange…
Manufacturing and AlliedBOC Kenya LtdBritish American Tobacco…Carbacid Investments LtdEast African Breweries LtdFlame Tree Group Holdings…Kenya Orchards LtdMumias Sugar Company LtdUnga Group Ltd