Genghis Weekly Strategy - 11th November 2019
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 index, NSE 20 YTD. Notably, the Momentum portfolio YTD performance is ahead of all the benchmark indices including the Zamara Index.
Genghis Trading Ideas for the week…
Equities
Accumulate KCB as it retraces towards price levels that existed before the repeal of Section 33B of Banking Act (interest rate controls). The banking sector sighed a big relief after Parliament repealed interest rate controls, shifting the credit market back to a free interest rate regime. With the repeal, the sector is expected to realize margins expansion given the additional room for risk pricing. Under the new credit environment, we expect KCB’s margins to maintain their above sector performance with a Net Interest Margin (NIM) of 8.2% and ROE of 22.7% posted in 1H19.
Fixed Income
SELL IFB1/2019/16 at 11.80%. The new infrastructure bond has been repriced upwards since coming to the market augmenting the pent-up demand for the paper. We believe an inflection point is imminent, more so with the repeal of interest rate caps. We thus recommend investors to narrow exposure at 11.80% levels.
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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