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The East African : January 20th 2014
MONEY AND EQUITY MARKETS JANUARY 18-24,2014 MARKET ACTIVITY EXPECTED TO PICK UP Regional investors go slow on stocks as market indices hit new highs The Kenya, Rwanda, Uganda and Tanzania bou≥ses have been on a ≥elative d≥ag since the end of 2013 By SCOLA KAMAU Special Correspondent over the past two weeks after a rally in the stockmarket towards the end of last year pushed indices to new highs. The Kenya, Rwanda, Uganda I and Tanzania bourses have been on a relative drag, compared with the period to the close of 2013, with only a slight change in market indices. However, analysts are predict- ing increased activity in the coming months. They project that the region’s bourses will benefit from relatively low inflation rates, which should leave consumers with more money to invest. The relative pickup of the global economy and the quantitative easing in the US have also revived international capital flows. Steady foreign interest in region- al stockmarkets is expected to see indices rise significantly this year, alongside the turnover. At the Nairobi securities Ex- change (NSE), while volumes traded almost tripled in the two weeks to January 14 to reach 29 million, from 11 million shares traded on the first day of trading in 2014, the benchmark 20 Share Index rose three per cent to 5058.51, from 4910.74. The NSE All-Share Index (NASI) has risen to 141.01 from 140.79 at the beginning of the year. As stocks indicators rose, trad- ing in bonds was on a downward spiral towards the end of 2013. The bond market closed the year on a low as trading declined, with investors shunning bonds to cash in on the rising share prices. In December, trading stood at $279 million as turnover nearly went back where it started in January at $234 million. The decline in bond trading to- wards end of last year was partly attributed to falling yields. Yields of most bonds plummeted from a high of 14 per cent in June last year nvestors at East Africa’s bourses seem to have taken a breather to about 12 per cent in December. “The NSE gave impressive re- turns in 2013 driven by dividend pay-out and company financial releases as well as expectations of positive performance as inflation and interest rates maintained at sentinel levels. The bourse also attracted increased investments from international institutions looking for high returns in Africa owing to Fed’s alteration of its monetary policy stimulus, while investors sought growth avenues in emerging markets with Africa increasingly visible in global stockmarket performance,” said Old Mutual Securities in a research note. The Rwanda Securities Ex- change (RSE) Share Index (RSI) gained less than one per cent to reach 233.94 points on January 13 from 232.42 points at the beginning of 2014, pushed by Bralirwa and Bank of Kigali shares, the only counters that have been trading since the beginning of 2014, with analysts predicting a similar trend this year. The market recorded 105,900 BoK shares and 46,700 Bralirwa to close 2013. The Uganda Securities Ex- change (USE) has started on a low note, with the All Share Index gaining less than one per cent to reach 1,521 points on January 15, from 1,520.88 two weeks ago. Activity on Dar bourse The Dar es Salaam Securities Exchange (DSE) Index has registered a minimal increase of 1.8 per cent per cent from 1,870.180 at the beginning of the year, to 1,904.200 points last week. The Tanzania Share Index almost doubled in 2013, jumping 95 per to 2,839.680 at the close of the year, from 1,455.52 in January 2013. Analysts at the Tanzania Securi- ties Ltd said they expected continued subdued activity in the coming weeks, with moderate support from foreign investors and some locals. “Activity is expected on NMB, Business watch Rwanda records lowest GDP growth since 2009 Rwanda’s GDP slowed in the three months to December 2013, growing at 3.9 per cent, compared with 6.7 per cent over the same period in 2012. This was blamed on the tightening of the fiscal policy in the first half of the year and the eurozone crisis. Statistics released last week by the National Institute of Statistics Rwanda indicate it is the lowest quarterly growth recorded since the third quarter of 2009, when the economy expanded by 3.5 per cent. Tanzania shilling depreciates as demand for dollar rises The Tanzanian shilling has depreciated to trade at Tsh1621 against the dollar last week, according to Bank of Tanzania, compared with Tsh1588 at the start of the year. Analysts said increased demand for dollars as tourists travelled back to their countries and importers returning to business put pressure on the shilling. The Kenyan shilling on the other hand has maintained a Ksh85.39 rate to the dollar since the beginning of the year, thanks to CBK’s decision to keep the Central Bank Rate at 8.5 per cent. The Nairobi Securities Exchange. Picture: File FOUR BOURSES AT SLUGGISH START of 2014. Nairobi Securities Exchange: In the two weeks to January 14, the benchmark 20 Share Index rose three per cent to 5,058.51, from 4,910.74. The NSE All-Share Index has risen to 141.01 from 140.79. Rwanda Securities Exchange: RSE Share Index gained less than one per cent to reach 233.94 points on January 13 from 232.42 points at the beginning CRDB and cement counters as speculators take positions,” said Brenda Massay, an analyst at the TSL. In Kenya, analysts said activity at the bourse is expected to pick up in the coming weeks ahead of the financial reporting period in March. “Investors buy more shares at this time in readiness for anticipated positive annual results in the first quarter of the year which push prices up,” said Eric Musau, an analyst at Standard Investment Bank. African bourses’ performance will improve this year experts say, riding on a stable economic environment demonstrated in 2013 and which is expected to prevail in 2014. Inflation and interest rates are expected to fall further as the shilling across Kenya, Uganda, Tanzania and Rwanda stabilises. The rebound of equity market ac- Uganda Securities Exchange: The All Share Index gained less than one per cent to reach 1,521 points on January 15, from 1,520.88 two weeks ago. Dar es Salaam Securities Exchange: The DSE Index has registered a 1.8 per cent increase from 1,870.180 at the beginning of the year, to 1,904.200 points last week. tivity is tied to the recent slowdown in Uganda, Tanzania, Rwanda and Kenya inflation rates and the relative pick up of the global economy, which have restored investor confidence and revived international capital flows, analysts said. “We are seeing improved eco- nomic conditions in Uganda, which is lifting the stockmarket. The year is going to be a good one for stockmarkets across the region too,” said Arthur Esiko, a research analyst at African Alliance Uganda. “Foreign investors have returned to the market and they are actively investing in equities,” he said. Most investors who put their money in the stockmarkets got handsome returns, especially at the NSE, which closed the year as the best performing bourse in Africa and the fourth in the World, according to the MSCI index — the stockmarket index of some more than 1,600 “world” stocks. KenGen seeking $174 million in Rights Issue to fund projects The Kenya Electricity Generating Company (KenGen) is seeking to raise Ksh15 billion ($174.4 million) in a rights issue by the end of this year to fund its new power plants, anticipated to more than double its capacity from the current 1,239MW to 3,000MW by 2018. KenGen said it had set aside 2.21 billion new shares to existing shareholders for the cash call, valuing the fresh stocks at Ksh30.6 billion ($355 million), Business Daily reported. The shareholders will be entitled to one new share for every one held if KenGen opts to use the entire stocks for the rights issue. HF searching for new directors to meet board requirements 49 Housing Finance offices in Nairobi. Picture: File Housing Finance, the listed Kenyan mortgage lender has begun its search for new directors to meet governance rules that may reduce the influence of Equity Bank in its operations, Business Daily reported. Equity owns the majority stake of 24.9 per cent of HF while Britam and NSSF control 21.4 per cent and 6.81 per cent respectively. The lenders have until June as per Central Bank of Kenya directives to ensure that at least a third of board seats are held by independent directors.
January 13th 2014
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