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Genghis Weekly Strategy - 9th March 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 initial price decline on key counters, SCOM, KCB and EQTY on account of coronavirus fears and the ensuing impact on global economies, we witnessed an uptrend last week as jitters mellowed, with the counters gaining 5.7%, 11.8% and 8.4% w/w, respectively. Foreign selling pressure still exists and the business environment remains weak, with the Stanbic PMI pointing towards a contraction over the first two months of 2020. Should the uptrend persist this week, we urge investors to take short positions or shed exposure at or near KES 33.0, KES 54.0 and KES 53.0 for SCOM, KCB and EQTY, respectively. 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 FXD1/2019/5 at 11.10% - 11.15% levels. We remain constructive on FXD1/2019/5 as demand is saturated at the shorter end of the yield curve. This is against the backdrop of the announcement of longer-maturity papers in this month’s primary bond issue. Compared to FXD2/2019/5, the paper has a superior coupon which should be attractive to income-hungry investors.