2018 has been a rough year for investors at the Nairobi Securities Exchange (NSE) #ticker:nse, with stocks offering capital gains proving hard to come by.
Market data shows that only seven stocks were in the black in the year-to-date by close of trading on December 21, with 53 having shed value during a year of a bear run that hit the market in spite of the improving economy and political calm following the rapprochement between President Uhuru Kenyatta and opposition leader Raila Odinga in March.
This year, corporate governance issues have come to the fore in the market, with investors quick to punish a stock whenever questions were raised about dubious management practices.
Financially underperforming companies have also fallen victim of negative investor sentiment, with investors proving sensitive to the prospects of no dividend pay-outs at a time when capital gains have dried up on many stocks.
The top 10 worst performing stocks, all of which have shed at least half of their value at the market this year, are representative of companies that have fallen upon hard times both in the C-suite and on their books.
The worst performing stock this year is Deacons East Africa #ticker:DCON, whose value has nearly been wiped out at -87.1 per cent.
Financial difficulties have forced the fashion retailer to go into administration, and subsequently the stock has been suspended from trading at the NSE with a last trading price of just 45 cents. It had opened the year at Sh3.50.
Kenya Orchards #ticker:ORCH has shed 85.6 per cent, going down from Sh97 a share in January to Sh14 on December 21. The stock fell victim to a little known rule in the NSE on September 18, which states that companies lose their daily price movement protection of 10 per cent if they have not traded for three continuous months.
“NSE daily trading rules indicate that the daily price movement for any equity security in a single trading session shall not be more than 10 per cent of the equity reference price. However, this does not apply for a security that has not traded for over three calendar months, as was the case for Kenya Orchards,” said the CMA in their quarter three market soundness report.
Uchumi #ticker:UCHM, which has been beset by financial problems that have seen it delay reporting its financial results for the year ending June 2018 by seven months, has shed 83.7 per cent of its value, dropping to 75 cents from Sh4.60 in January.
The cash strapped retailer was supposed to have released the results by October as required by the Capital Markets Authority (CMA) regulations but is now blaming its deep financial woes for the delay.
Other significant losers include Nairobi Business Ventures #ticker:NBV (-65.7 per cent to Sh1.15) and Kenya Power #ticker:KPLC (-62.6 per cent to Sh3.40).
The power firm has been beset by corporate governance troubles, with two of its former CEOs and other top management staff in court on corruption charges.
Eveready East Africa #ticker:EVRD, East Africa Cables #ticker:CABL, ARM Cement #ticker:ARM, Kenya Airways #ticker:KQ and Home Afrika #ticker:HAFR round off the rest of the top 10 losers list, with share price declines of 57.8, 57.3, 55.4 and 51.9 per cent respectively this year.
ARM is currently suspended from trading after falling into administration.
On the gainers list, firms that have been the subject of takeover bids top in share price appreciation.
Express Kenya #ticker:XPRS, whose chief executive Hector Diniz lodged an unsuccessful takeover bid earlier this year, leads with a gain of 48 per cent, from Sh3.75 to Sh5.55 a share.
The bid failed after he was unable to garner support of shareholders holding a minimum combined stake of 75 per cent.
KenolKobil #ticker:KENO is second with a gain of 40 per cent to Sh19.60. the oil marketer is currently the subject of a takeover bid by French firm Rubis Energie, which has offered existing shareholders Sh23 a share for their stake.
Unga Group #ticker:UNGA, which like Express was the subject of a failed bid by US conglomerate Seaboard Corporation—which is a shareholder in the firm— has gained 35.5 per cent this year to Sh39.30, mostly due to the price rally during the offer period.
The only other companies with a positive movement in price this year are Barclays Kenya #ticker:BBK, up 16.1 per cent to Sh11.90, Total Kenya #ticker:TOTL at 13.8 per cent to Sh26.75, Kapchorua Tea #ticker:KAPC at 13 per cent to Sh74 and Stanbic Holdings #ticker:CFC at 9.3 per cent to Sh88.50.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.