Genghis Cross-Asset Weekly Strategy - 27th July 2020
Our Momentum, Income and Value equities portfolios continue to outperform the benchmark NSE 20 index. Performance of the Momentum and Income portfolios was ahead of all the benchmark indices including the Nairobi All Share Index (NASI) and Zamara Index.
Genghis Trading Ideas for the week…
Equities
- BUY EABL at current price levels (KES 160, TP 201.68).
We updated our valuation as despite the expected decline in FY20 results, we still see an upside of 26.0%. Attractive P/E ratio of 13.4x against peer average of 15.6x despite its expected above sector ROE of 61.7%.
Fixed Income
- SELL FXD4/2019/10 at 11.55% levels
KES 34.2Bn was rejected in last week’s re-opened 10-year paper. We are of the view that the positioning bids (investors eyeing that tenor on their portfolios) can look at the FXD4/2019/10 paper as an alternative.
Global Markets & Derivatives
- We are eyeing BUY positions on September 2020 futures contracts for Equity and KCB. For KCB, we will have a Take Profit (TP) at KES 39 and a Stop Loss (SL) at KES 31 while a TP and SL at KES 36 and KES 30, respectively, for Equity.
- On Friday, we closed out the Safaricom Short position on the September 2020 futures contract. We entered the trade at KES 30 (TP at 32; SL at 21.5) and exited at 27 as we think the counter has support at current levels buoyed by foreign investors.
Trade entry cost per contract*: Initial Margin + Additional Margin = KES 3,300
Upside on the notional value: 10% (Entry = KES 30 & Exit = KES 27) [Short positions have an upside if the underlying stock prices are declining]
Gross Performance per contract: 90.9% KES 3,000 (Return**)/KES 3,300 (Trade entry cost)
*1 Safaricom futures contract represents 1,000 shares in the spot market
**KES 0.01 move in either direction in the underlying stock equals +/- KES 10 return on the futures contract.
Genghis Capital is an innovative and customer focused Investment Bank licensed by the Capital Markets Authority (CMA). Founded in 2008, Genghis is one of the leading investment banks in Kenya. Since its establishment, Genghis has achieved tremendous growth to offer a well-diversified portfolio of financial services that includes:
- i. Securities(Equity/Debt) Trading
- ii. Research
- iii. Wealth Management services
- iv. Investment Advisory & Management via the GenCap Unit Trusts
- v. Corporate Finance & Transaction Advisory services
The Kenyan Capital Markets continue to develop in size, scope and sophistication. With this is an increasing demand for more specialized and personalized brokerage service and we at Genghis Capital are glad to be able to offer you this service. Our strength lies in ensuring our clients are up to speed with developments at the stock market and the economy. Research and technology remains our competitive and comparative advantage hence Experience, Expertise and Professionalism are some of the qualities you can expect from our team.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.