5

Daily Market Note

13 August 2012
th

Bloomberg: GNCP <GO>

www.genghis-capital.com

Equities NSE Breaches 3,800 The immense pressure on the NSE 20 index pushed it to breach the 3,800 level to close at 3792.22 points, a level it last traded on 18th July. This trend was carried forward to the other indices with the NASI shedding 0.73 points, the FTSE 15 losing 0.66 points and the FTSE25 dropping 0.77 points. It was an even performance between the local and foreign investors though the foreigners maintained their net long positions at Kes.17Mn. Activity was low at Kes.133Mn; 73% lower than Fridays close. Market Capitalisation breached the Kes.1.1Tn mark to close marginally lower at Kes.1.09Tn. "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely." - Warren Buffett The highlights of the days trading activity are listed below:
Table 1: NSE Performance Table 2: NSE Indices

Top Traders Equity Equity Bank Ltd Safaricom Ltd CIC Insurance Group Ltd Barclays Bank Kenya Ltd Kenya Commercial Bank Ltd Volume 2,846,700 1,025,600 1,014,700 864,700 727,400
Index NASI NSE 20 Share FTSE NSE 15 FTSE NSE 25 Source: NSE

Market Indices Summary

Previous 83.86 3831.01 110.53 113.11 Today 83.13 3792.22 109.87 112.34 % change -0.87% -1.01% -0.60% -0.68%

Gaining Stocks Equity Eaagads Ltd DTB Kenya Ltd Unga Group Ltd NIC Bank Ltd Pan Africa Insurance Ltd Price (KES) 53.00 98.50 12.40 34.50 36.00 % Change 3.92 3.14 2.48 2.22 2.13

The Advance/Decline ratio at the close of todays trading session stood at 12/25 with 12 stocks advancing in price and 25 shedding prices. Foreign investor turnover increased to 49.61% in todays trading compared to 65.84% at the close of Fridays session. Todays session resulted in a net inflow of Kes.17.6Mn compared to a net inflow of Kes.89.9Mn at the close of the previous trading session. The highest foreign investor turnover was recorded on Equity Bank Ltd (NSE: EQTY) Kes.51.8Mn and Kenya Commercial Bank Ltd (NSE: KCB) Kes.8.3Mn. The 2 counters accounted for 45.01% and 90.72% of the total NSE and total foreign activity respectively. Equity Bank Ltd (NSE: EQTY) recorded the highest net inflow of Kes.8.8Mn. The highest net outflow was recorded on Barclays Bank Kenya Ltd (NSE: BBK) at Kes.1.7Mn.

Losing Stocks Equity Athi River Mining Ltd Eveready Ltd Carbacid Investments Ltd Kenya Re-insurance Express Kenya Ltd Price (KES) 185.00 1.80 118.00 10.10 3.75 % Change -8.42 -7.69 -6.35 -5.61 -5.06

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Table 3: NSE Summary

10th August 2012 Market Cap. (Kes.Bn) Equity T/O: (Kes.Mn) Local/Foreign Equity T/O: (%) Advance:Decline Ratio Bond T/O: (Kes.Mn) 1106.78 485.12 34.16/65.84 22/14 1,647.20

13th August 2012 1097.14 133.58 50.39/49.61 12:25 1,278.00 200.00 15.65%

% Change -0.87% -72.46% N/A N/A -22.41% N/A N/A

Sell/Buy Back Transactions T/O: 0.00 (Mn) Sell/Buy Back Transactions (% of 0.00% Total Bond T/O) Source: NSE & Genghis Capital Estimates

Table 4: Foreign Equity Turnover

Foreign Investor Equity Turnover 10

th

August 2012 Sales (Kes) 114,765,312.50 89,874,172.50

13th August 2012 Buys (Kes) 41,954,935.00 Net Inflow/(Outflow) Position Sales (Kes) 24,314,172.50 17,640,762.50

Buys (Kes) 204,639,485.00 Net Inflow/(Outflow) Position

Source: NSE & Genghis Capital Dealers

The Agricultural Sector closed at the top spot up 0.68% buoyed by the performance of Eaagads Ltd (NSE: EGAD) which gained 3.92% to close at a VWAP Kes.53.00. The Total Index was depressed on the back of decreasing prices in 8 segments to 0.76%. The Construction & Allied segment occupied the bottom spot down 2.46% depressed by Athi River Mining Ltd (NSE: ARM) which shed 8.42% to close at a VWAP of Kes.185.
Table 5: Daily Segmental Price Performance Analysis

Sector Agricultural Banking Automobiles & Accessories Energy & Petroleum Commercial & Services Insurance Telecommunication & Technology Manufacturing & Allied Investment Construction & Allied Total Index Source: NSE & Genghis Capital

Constituents 7 10 4 4 9 6 2 9 4 5 60

Price Performance (% Change) 0.68 0.47 -0.32 -0.37 -0.44 -0.72 -1.17 -1.65 -1.67 -2.40 -0.76

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Trading Ideas:
The table below shows the performance of selected stocks that Genghis Capital recommended in the year.
Table 6: Equity Picks (Fig in KES)

Company Centum Investments Ltd Equity Bank Limited KenolKobil Limited NIC Bank Limited EA Cables Ltd Athi River Mining Ltd Diamond Trust Bank Ltd KCB Group Ltd Uchumi Supermarkets Ltd Kenya Power & Lighting Co. Nation Media Group Ltd British American Investments Cooperative Bank Limited Kenya Reinsurance Corp. Scangroup Ltd Portfolio Return Source: Genghis Capital Ltd

Price at Recommendation 14.55 15.80 9.80 26.50 11.80 156.00 88.50 18.50 7.20 15.85 153.00 4.00 11.55 10.05 49.25

Target Price Current Price 19.55 19.90 13.10 45.50 14.55 198.50 123.40 27.10 17.25 22.00 187.70 6.25 18.50 15.35 59.60 12.05 21.50 15.45 34.50 10.40 185.00 98.50 24.75 15.25 15.50 180.00 5.90 11.05 10.10 58.00

Upside Potential 38.36% -8.04% -17.94% 24.18% 28.52% 6.80% 20.18% 8.67% 11.59% 29.55% 4.10% 5.60% 40.27% 34.20% 2.68%

Return to Date -17.18% 36.08% 57.65% 30.19% -11.86% 18.59% 11.30% 33.78% 111.81% -2.21% 17.65% 47.50% -4.33% 0.50% 17.77% 23.15%

Recommendation

BUY HOLD SELL BUY BUY HOLD BUY BUY HOLD BUY HOLD HOLD BUY BUY HOLD

Fixed Income: Regulator Still Relevant in Market Money Markets: The CBK remained relevant in the market to mop up Kes.3Bn in excess liquidity through repos and TADs with the interbank rate opening the week as it closed the last at 10.339%. Primary Markets: The CBK will be in the market this week targeting Kes.8Bn Kes.4Bn from the 91-Day T-Bill auction to be held on 16th August and another Kes.4Bn from the 182-Day T-Bill auction to be held the day before. Participation rates have picked up in the last auction pushing the yields lower; a trend that is expected to carry on in the week. Secondary Markets: The fixed income market remained relevant among investors albeit a dip in turnover of 22% to Kes.1.3Bn driven by IFB that transacted Kes.600Mn; 46% of total turnover.
Table 7: Short -Term Interest Rates, Treasury Notes & CDs

Tenor 91 Day 182 Day 1 Year 2 Year 5 Year 10 Year

Kenya 12.00% 12.64% 12.85% 13.83% 11.86% 12.71%

Uganda 18.11% 18.06% 17.00% 14.84% 15.39% 15.28%

Tanzania 13.06% 13.53% 13.54% 14.77% 14.74% 14.99%

U.S 0.10% 0.14% 0.18% 0.26% 0.62% 1.49%

LIBOR (USD) 0.46% 0.74% 1.07% ----

Source: CBK, BOU, BOT, US Treasury, BBA, Genghis Capital

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Currency: Mixed Performance on The Day Performance: The KES provided a steady performance in todays session with equal movement in both directions for the currency pairs listed in Table 8. The KES lost against the majors: shedding a marginal 0.26% vs. USD and 0.29% against both the GBP and EUR. The reverse occurred against the other currencies recording the largest gain of 0.54% vs. UGX. Modest appreciations were recorded in the other currency pairs as well.
Table 8: Currency Rate

Currency Pair USD/KES GBP/KES EUR/KES ZAR/KES KES/UGX KES/TZS INR/KES Source: Bloomberg 4.00pm E.A.T, Genghis Est.

10th August 2012 84.00 131.16 103.19 10.35 29.41 18.77 1.52 27thJan 2012

13th August 2012 84.22 131.54 103.49 10.30 29.57 18.83 1.51 30thJan 2012

Technical Analysis and Outlook: The chart below shows the candle sticks for the USDKES pair for the year. Over the past few months this pair has been dominated by Double Dojis Estimatesindicating a preparation for a major move but the regulator has been very active in the market ensuring this pair remains stable at current rates.

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Genghis Index:

Table 9: Genghis Index Performance

Large-Cap Index

tly

The index shed 0.61% as Market Capitalisation marginally slipped to Kes.888Bn. The best performing counter in this segment was Diamond Trust Bank Ltd (NSE: DTBK) up 3.14%. Losing by the biggest margin in this segment Athi River Mining Ltd (NSE: ARM) shedding 8.42%.
Mid-Cap Index

The Index lost 0.98% over yesterdays close as Market Capitalisation was at stagnant Kes.137Bn. This sections best performer was Pan Africa Insurance Holdings Ltd (NSE: PAFR) up 2.13%. Losing by the biggest margin was Investments Ltd (NSE: CARB) down 2.13%.
Small-Cap Index

Carbacid

Source: Genghis Capital

Price performance closed down 0.49% with market capitalization constant at Kes.23Bn. Eaagads Ltd (NSE: EGAD) gained 3.92% to lead the section as the best performer. Losing by the biggest margin was Eveready EA Ltd (NSE: EVRD) shedding 7.69%.

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Contacts Report By: Moses Waireri,Research Analyst | Tel:+254 20 2774781 | Email: mwaireri@genghis-capital.com Report By: Evelyne Wanjiku, Research Analyst | Tel:+254 20 2774781 | Email: ewanjiku@genghis-capital.com Anthony Kimani, Research Analyst | Tel:+254 20 2774781 | Email: akimani@genghis-capital.com Kelvin Nyabando, Research Analyst | Tel:+25420 2774781 | Email: knyabando@genghis-capital.com Edgar Wamalwa,Head of Research | Tel:+254 20 2774767 | Email: ewamalwa@genghis-capital.com George Guy,Fixed Income Dealer | Tel:+254 20 2774756| Mob: +254 727 142231 | Email: gguy@genghis-capital.com Mbuthia Irungu, Head Dealer | Tel:+254 20 2774789 | Mob: +254 721 791324 | Email: mirungu@genghiscapital.co.ke Andrew Maina,Equity Dealer | Tel:+254 20 2774789 | Mob: +254 722 667936 | Email: amaina@genghis-capital.com
Disclaimer: The content provided on this document is provided as general information and does not constitute advice or recommendation by Genghis Capital Ltd and should not be relied upon for investment decisions or any other matter and that this document does not constitute a distribution recommending the purchase or sale of any security or portfolio. Please note that past performance is no indication of future results. The ideas expressed in the document are solely the opinions of the author at the time of publication and are subject to change without notice. Although the author has made every effort to provide accurate information at the date of publication all information available in this report is provided without any express or implied warranty of any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before exercising any decisions based on the information present in this document. Any action that you take as a result of this information, analysis, or advertisement is ultimately your responsibility.

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