5

Daily Market Note

5 September 2012
th

Bloomberg: GNCP <GO>

www.genghis-capital.com

Equities NSE Hits New High Judgement day had finally arrived with majority of the investment industry holding their bated breathe for the MPC decision. The NSE 20 share index bounced higher closing at 3897points; the highest this year. The NASI gained 0.20 points to remain the 85 level, the FTSE 15 and 25 share indices floated above the 113 and 115 points respectively. Local investors conserved their dominance in the market accounting for 65% of the total turnover with foreign investors surging back into the market maintaining net long positions on most counters resulting in a net inflow of Kes.82.6Mn. Equity turnover was bouyed to Kes.553Mn with improved participation. Market Capitalisation was flat at Kes.1.13Tn. "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely." - Warren Buffett The highlights of the days trading activity are listed below:
Table 1: NSE Performance Table 2: NSE Indices

Top Traders Equity Safaricom Ltd CIC Insurance Group Ltd Mumias Sugar Co Ltd Barclays Bank Ltd Equity Bank Ltd Volume 3,397,800 1,348,200 1,287,100 1,274,100 1,220,900
Index NASI NSE 20 Share FTSE NSE 15 FTSE NSE 25

Market Indices Summary

Previous 85.62 3895.86 113.25 115.63 Today 85.82 3897.82 113.17 115.67 % change 0.24% 0.05% -0.07% 0.03%

Source: NSE

Gaining Stocks Equity City Trust Ltd Kenya Re-insurance Ltd Olympia Capital Group BRITAK Ltd EAPCC Ltd Price (KES) 350.00 11.65 3.80 5.95 58.00 % Change 20.69 7.87 7.04 4.39 3.57

The Advance/Decline ratio at the close of todays trading session stood at 18/15 with 18 stocks advancing in price and 15 shedding prices. Foreign investor participation rose 65.13% to in todays trading compared to 34.77% at the closed yesterdays session. Todays session resulted in a net inflow of Kes.82.6MN compared to a net inflow of Kes.120.7Mn at the close of the previous trading session. The highest foreign investor turnover was recorded on East African Breweries Ltd (NSE: EABL) Kes.272.9Mn and Athi River Mining Ltd (NSE: ARM) Kes.53.5Mn. The 2 counters accounted for 75.29% and 14.75% of the total NSE and total foreign activity respectively. Athi River Mining Ltd (NSE: ARM) recorded the highest net inflow of Kes.53.Mn. The highest net outflow was recorded on National Bank Ltd (NSE: NBK) at Kes.497Mn.

Losing Stocks Equity Williamson Tea Kenya Ltd CfC Insurance Ltd Bamburi Cement Ltd CIC Insurance Ltd Sameer Africa Ltd Price (KES) 212.00 49.00 168.00 3.70 3.80 % Change -5.78 -4.70 -4.00 -1.33 -1.30

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Table 3: NSE Summary

4th Sept 2012 Market Cap. (Kes.Bn) Equity T/O: (Kes.Mn) Local/Foreign Equity T/O: (%) Advance:Decline Ratio Bond T/O: (Kes.Mn) 1130.02 146.74 65.23/34.77 21:12 4182.85

5th Sept 2012 1132.72 553.05 65.13/34.87 18:15 3364.50 300.00 8.92%

% Change 0.24% 276.89% N/A N/A -19.56% N/A N/A

Sell/Buy Back Transactions T/O: 300.00 (Mn) Sell/Buy Back Transactions (% of 7.17% Total Bond T/O) Source: NSE & Genghis Capital Estimates

Table 4: Foreign Equity Turnover

Foreign Investor Equity Turnover 4th September 2012 Buys (Kes) 25,810,680.00 Net Inflow/(Outflow) Position Sales (Kes) 25,689,950.00 120,730.00 5thSeptember 2012 Buys (Kes) 222,567,247.50 Net Inflow/(Outflow) Position Sales (Kes) 139,987,890.00 82,579,377.50

Source: NSE & Genghis Capital Dealers

The Investment sectorclosed top moving 6.93% up buoyed by the performance of City Trust Ltd (NSE: BRTK) which gained 21% to close at a VWAP Kes.350. The total index performance was up 0.94% with only seven segments posting improved performance. The Agriculture sector occupied the bottom spot down 1.06%dragged down by Williamson Tea Kenya Ltd (NSE: WTK) which shed 5.78% to close at a VWAP of Kes.212
Table 5: Daily Segmental Price Performance Analysis

Sector Investments Energy & Petroleum Insurance Construction & Allied Manufacturing & Allied Banking Automobiles & Accessories Telecommunication & Technology Commercial & Services Agriculture Total Index Source: NSE & Genghis Capital

Constituents 9 4 6 5 7 10 4 2 9 7 60

Price Performance (% Change) 6.93 1.20 0.94 0.60 0.50 0.35 0.09 0.00 -0.13 -1.06 0.94

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Trading Ideas:
The table below shows the performance of selected stocks that Genghis Capital recommended in the year.
Table 6: Equity Picks (Fig in KES)

Company Centum Investments Ltd Equity Bank Limited KenolKobil Limited NIC Bank Limited EA Cables Ltd Athi River Mining Ltd Diamond Trust Bank Ltd KCB Group Ltd Uchumi Supermarkets Ltd Kenya Power & Lighting Co. Nation Media Group Ltd British American Investments Bamburi Cement Limited Cooperative Bank Limited Kenya Reinsurance Corp. Scangroup Ltd Portfolio Return Source: Genghis Capital Ltd

Price at Recommendation 14.55 15.80 9.80 26.50 11.80 156.00 88.50 18.50 7.20 15.85 153.00 4.00 168.00 11.55 10.05 49.25

Target Price Current Price 19.55 19.90 16.90 45.50 14.55 198.50 123.40 27.10 17.25 22.00 197.70 6.25 201.00 18.50 15.35 59.60 12.25 23.50 15.00 34.75 10.20 209.00 100.00 26.00 16.30 16.60 201.00 5.95 168.00 11.60 11.65 56.50

Upside Potential 37.34% -18.09% 11.24% 23.63% 29.90% -5.29% 18.96% 4.06% 5.51% 24.55% -1.67% 4.80% 16.42% 37.30% 24.10% 5.20%

Return to Date -15.81% 48.73% 53.06% 31.13% -13.56% 33.97% 12.99% 40.54% 126.39% 4.73% 31.37% 48.75% 0.00% 0.43% 15.92% 14.72% 27.09%

Recommendation

BUY HOLD HOLD BUY BUY HOLD BUY HOLD HOLD BUY HOLD HOLD HOLD BUY BUY HOLD

Fixed Income: 182-Day T-Bill Yields down Money Markets: The CBK was active in todays session to mop up Kes.15Bn in excess liquidity through repurchase agreements and TADs as the interbank rate increased to 7.255%. Primary Markets: The 182-day T-Bill was auctioned today with yields decreasing from 9.848% to 9.351% with a subscription rate of 171%. The regulator accepted bids worth 4.1 Bn. The 91-day T-bill will be auctioned tomorrow where the regulator seeks to raise Kes.4Bn. Yields are expected to continue decreasing ahead of the expected rate cut. The CBK seeks to raise up to Kes.15Bn through a 15-yr Treasury bond that will be on sale from September 4th September 18th with the auction being done on 19th September. The bond will have a fixed coupon rate of 11% pa. Secondary Markets: In the Fixed income market, bond activity declined 20% to Kes.3.36Bn. The Infrastructure Bonds accounted for 38% of the activity at Kes.1.3Bn.
Table 7: Short -Term Interest Rates, Treasury Notes & CDs

Tenor 91 Day 182 Day 1 Year 2 Year 5 Year 10 Year

Kenya 8.12% 9.35% 10.34% 11.11% 11.86% 12.71%

Uganda 13.10% 18.06% 17.00% 14.84% 15.39% 15.28%

Tanzania 13.06% 13.53% 13.54% 13.81% 14.74% 14.99%

U.S 0.11% 0.13% 0.19% 0.26% 0.71% 1.16%

LIBOR (USD) 0.43% 0.72% 1.04% ----

Source: CBK, BOU, BOT, US Treasury, BBA, Genghis Capital

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Currency: KES Rebounds on Rate Cut Performance: The KES bounced back in the day gaining against all the currency pairs listed in Table 8. The largest gain was 0.71% in the KESUGX pair. The KES performed extremely well against the other African currencies 0.61% gain vs. TZS and 0.52% vs. ZAR. In the international scene the KES replicated this performance gaining 0.67% vs. GBP, up 0.66% vs. EUR and appreciating 0.35% vs. USD. The recent rate cut must have buoyed the performance of the KES.
Table 8: Currency Rate

Currency Pair USD/KES GBP/KES EUR/KES ZAR/KES KES/UGX KES/TZS INR/KES Source: Bloomberg 4.00pm E.A.T, Genghis Est.

4th Sept 2012 84.58 134.33 106.38 10.11 29.58 18.58 1.52 27thJan 2012

5thSept 2012 84.28 133.43 105.68 10.05 29.79 18.69 1.51 30thJan 2012

Technical Analysis and Outlook: The chart below shows the Stochastic Oscillator for the USDKES currency pair over the past 3 days. The effect on the anticipated MPC decision can Estimatesclearly be seen in the chart below but the regulator has managed to keep a cap on any further weakness; a situation that will be replicated tomorrow.

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Genghis Index:

Table 9: Genghis Index Performance

Large-Cap Index

The index was up 0.10% as Market Capitalisation ascended to Kes.923.8Bn. The best performing counter in this segment was NIC bank Ltd (NSE: NIC) up 2.96%. Losing by the biggest margin in this segment was Bamburi Cement Ltd (K) Ltd (NSE: BAMB) shedding 4.00%.
Mid-Cap Index

The Index closed lost 0.97% over yesterdays close as Market Capitalisation reduced to Kes.136.81Bn. This sections best performer was Kenya Reinsurance Ltd (NSE: KNRE) up 7.87%. Losing by the biggest margin was CFC Insurance Holdings Ltd (NSE: CFCI) down 4.70 %.
Source: Genghis Capital Small-Cap Index

Price performance was up 0.50% with market capitalization also increasing to Kes.21.5Bn. Express Kenya Ltd (NSE: XPRS) gained 5.48% to lead the section as the best performer. Losing by the biggest margin, was Eaagads Ltd (NSE: EGAD) shedding 0.93%.

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Contacts Report By: Moses Waireri,Research Analyst | Tel:+254 20 2774781 | Email: mwaireri@genghis-capital.com Report By: Evelyne Wanjiku, Research Analyst | Tel:+254 20 2774781 | Email: ewanjiku@genghis-capital.com Anthony Kimani, Research Analyst | Tel:+254 20 2774781 | Email: akimani@genghis-capital.com Report By: Kelvin Nyabando, Research Analyst | Tel:+25420 2774781 | Email: knyabando@genghis-capital.com George Guy,Fixed Income Dealer | Tel:+254 20 2774756| Mob: +254 727 142231 | Email: gguy@genghis-capital.com Nyawira Waithaka, Equity Dealer | Tel:+254 20 2774777 | Mob: +254 723 693481 | Email: nwaithaka@genghis-capital.com Andrew Maina, Senior Equity Dealer | Tel:+254 20 2774789 | Mob: +254 722 667936 | Email: amaina@genghis-capital.com
Disclaimer: The content provided on this document is provided as general information and does not constitute advice or recommendation by Genghis Capital Ltd and should not be relied upon for investment decisions or any other matter and that this document does not constitute a distribution recommending the purchase or sale of any security or portfolio. Please note that past performance is no indication of future results. The ideas expressed in the document are solely the opinions of the author at the time of publication and are subject to change without notice. Although the author has made every effort to provide accurate information at the date of publication all information available in this report is provided without any express or implied warranty of any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before exercising any decisions based on the information present in this document. Any action that you take as a result of this information, analysis, or advertisement is ultimately your responsibility.

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