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Genghis Weekly Strategy - 24th 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
Following the launch of our Genghis Playbook 2020 (see Presentation) and our expectation of a downward market correction in the equities market during 1H20, we followed up on this view with a brief on the derivatives section, particularly, on short position exposure. We are witnessing increased foreign selling pressure, with occasional bouts of uncertainty (where prices will fluctuate between the resistance and support levels on the key traded counters, SCOM, EQTY and KCB). We recommend that investors take short positions or shed exposure at or near the current resistance levels (KES 33.0, KES 53.0 and KES 54.0 for SCOM, EQTY and KCB, respectively). The contract target expiry dates should coincide approximately a month after book closure meaning the short position should be closed between mid-May to end-June for KCB and EQTY. We encourage investors to target the June 18 Contract - Short position (for KCB and EQTY). Our justification for the market correction and other details may be accessed at Genghis Playbook 2020 Supplement Note I.

Fixed Income
BUY FXD1/2014/10 at 11.20% - 11.30% levels. With demand heavy at the short end of the curve, we like FXD1/2014/10 which has a maturity of 3.91 years. Relative to comparable bond maturities, it is priced lower (dirty price closer to clean price) on the backdrop of semi-annual coupon payment last month.