Genghis Weekly Strategy - 10th February 2020
In this week's edition of the Weekly Strategy Report, we give a recap of the equities and fixed income markets' performance over the past week and our trading ideas for the coming week.
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).
Genghis Trading Ideas for the week…
Equities
WPP Scangroup announced on 1st November 2019 the intended sale of its shares in Millward Brown East Africa Ltd, Millward Brown Nigeria Ltd and Millward Brown West Africa Ltd. The company is expected to realize a net cash flow of KES 5.0Bn from the sale, with 40.0% of the amount distributed to shareholders in a special dividend. We caution against a dividend strategy on WPP Scangroup due to the expected capital loss when the stock goes ex-div as the market prices in the conclusion of the dividend period. Risks include liquidity constraints on the counter which could potentially be exacerbated by herding behavior already witnessed on the counter. Additionally, holding onto the stock in the long run in order to attempt to circumvent the potential capital loss enhances price risk.
Fixed Income
SELL IFB1/2019/16 at 11.00% - 11.10% levels. We do not expect further bond price rally on the paper in the short-term. To be exact, the yield on the paper has declined circa 80bps year-to-date, effecting 3.3% total returns in the period. We recommend this tactical trade to income-hungry investors.
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.
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