Genghis Weekly Strategy - 17th 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
We recommend a BUY on SCB and BBK to Income investors with a long-term investment horizon. The two banks maintain the highest yield in our income portfolio, with after tax dividend yields of 9.5% and 8.3%, respectively. The two banks have a history of consistent and stable growth in dividend (11.8% and 10.0%, respectively, over the last two years), while operating metrics have improved over the same period (ROE for the two banks rising considerably over the last two years, 150 and 246bps, respectively). The two counters also offer opportunity for capital appreciation given their potential undervaluation compared to the market price.
Fixed Income
BID FXD1/2020/15 and FXD1/2018/25 at 12.65% - 12.70% and 13.20% - 13.40% levels, respectively. The historical 3-year average on the 15-year is 12.92%. Currently, the yields on the 15-year and 23-year are at 12.57% and 13.18%, respectively. According to Bloomberg, the indicative bid-ask spread is averaging 16bps on both the on-the-run 15-year (FXD3/2019/15) and the re-opened FXD1/2018/25.
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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