5

Daily Market Note

25 September 2012
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Bloomberg: GNCP <GO>

www.genghis-capital.com

Equities NSE Marches On Despite the distribution pressure on the bourse, the NSE 20 managed to claw 8.57 points to close at 3,950.97. This was echoed in the other indices as the NASI was up 0.16% to 86.43 while the FTSE 15 and 25 indices were 1.57 and 1.64 points higher respectively. Foreign investors were the stars in the show accounting for a mammoth 86% of the total equity turnover. A positive element is that they maintained a long position in majority of the counters. Equity turnover more than doubled in todays session driven mainly by the large caps to Kes.884Mn compared to Kes.313Mn recorded in yesterdays performance. Market Capitalisation was flat at Kes.1.14Tn. "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 East African Breweries Ltd Uchumi Supermarkets Ltd Kenya Commercial Bank Ltd Mumias Sugar Company Ltd Volume 11,885,400 2,942,600 949,300 861,100 615,100
Index NASI NSE 20 Share FTSE NSE 15 FTSE NSE 25

Market Indices Summary

Previous 86.29 3942.40 113.81 116.24 Today 86.43 3950.97 115.38 117.88 % change 0.16% 0.22% 1.38% 1.41%

Source: NSE

Gaining Stocks Equity Express Kenya Ltd EABL Uchumi Supermarkets Rea Vipingo Plantations Sasini Ltd Price (KES) 4.00 229.00 17.45 16.85 11.80 % Change 5.26 2.69 2.35 2.12 1.72

The Advance/Decline ratio at the close of todays trading session stood at 15/17 with 15 stocks advancing in price and 17 shedding prices. Foreign investor participation soared to 86% in todays trading compared to 40.8% at the close of yesterdays session. Todays session resulted in a net outflow of Kes.32.2Mn compared to a net inflow of Kes.84.7Mn at the close of the previous trading session. The highest foreign investor turnover was recorded on East African Breweries Ltd (NSE: EABL)Kes671.3Mn and Athi River Mining Cement Ltd (NSE: ARM)Kes.18.8Mn. The 2 counters accounted for 78.03% and 90.72% of the total NSE and total foreign activity respectively. Uchumi Ltd (NSE: UCHM) recorded the highest net inflow of Kes.6.8Mn. The highest net outflow was recorded on Trans-Century Ltd (NSE: TCL) at Kes.172, 525.00.

Losing Stocks Equity Standard Group Ltd Olympia Capital Holdings Longhorn Kenya Ltd Kenya Re-insurance Corp. Centum Investments Price (KES) 23.00 3.35 14.55 11.60 11.80 % Change -7.07 -6.94 -3.00 -2.93 -2.48

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Table 3: NSE Summary

24th Sept 2012 Market Cap. (Kes.Bn) Equity T/O: (Kes.Mn) Local/Foreign Equity T/O: (%) Advance:Decline Ratio Bond T/O: (Kes.Mn) 1141.62 313.90 59.2/40.8 14:14 605.50

25th Sept 2012 1143.42 884.30 14.0/86.0 15:18 4267.50 200.00 4.69%

% Change 0.16% 181.71% N/A N/A 604.79% N/A N/A

Sell/Buy Back Transactions T/O: 100.00 (Mn) Sell/Buy Back Transactions (% of 16.52% Total Bond T/O) Source: NSE & Genghis Capital Estimates

Table 4: Foreign Equity Turnover

Foreign Investor Equity Turnover 24th September 2012 Buys (Kes) 104,464,105.00 Net Inflow/(Outflow) Position Sales (Kes) 21,806,612.50 84,657,492.50 25th September 2012 Buys (Kes) 396,502,217.50 Net Inflow/(Outflow) Position Sales (Kes) 364,295,275.00 32,906,942.50

Source: NSE & Genghis Capital Dealers

Despite low activity, the Manufacturing & Allied sector was up 0.53% to occupy the top spot, buoyed by the performances of East African Breweries Ltd (NSE: EABL) +2.69% to VWAP 229.00. The total index performance was down 0.31% on the back of heavy pressure in five segments. The Investment sector occupied the bottom spot losing 2.36% dragged down by Olympia Capital Holdings Ltd (NSE: OCH) which shed 6.94% to close at a VWAP of Kes.3.35.
Table 5: Daily Segmental Price Performance Analysis

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

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

Price Performance (% Change) 0.53 0.37 0.35 0.00 0.00 -0.09 -0.32 -0.49 -1.09 -2.36 -0.31

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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. KenGen Ltd Jubilee Holdings Ltd Housing Finance Ltd 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 8.30 163.00 13.65 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 16.25 186.00 27.00 59.60 11.80 23.50 15.30 34.25 10.40 223.00 105.00 26.75 17.45 17.45 215.00 6.30 169.00 12.05 11.60 8.45 166.00 13.80 58.00 Upside Potential 39.64% -18.09% 9.47% 24.73% 28.52% -12.34% 14.91% 1.29% -1.16% 20.68% -8.75% -0.80% 15.92% 34.86% 24.43% 48.00% 10.75% 48.89% 2.68% Return to Date -18.90% 48.73% 56.12% 29.25% -11.86% 42.95% 18.64% 44.59% 142.36% 10.09% 40.52% 57.50% 0.60% 4.33% 15.42% 1.81% 1.84% 1.10% 17.77% 26.47% Recommendation

BUY SELL HOLD BUY BUY HOLD HOLD HOLD HOLD BUY HOLD HOLD HOLD BUY BUY BUY HOLD BUY HOLD

Fixed Income: Anticipated Uptick in Yields Money Markets: The CBK was active in todays session to mop up Kes.2Bn in excess liquidity through repurchase agreements and TADs as the interbank rate was up to 6.523%. Primary Markets: The 182-Day & 91-Day T-bill will be auctioned on 26th September and 27th September respectively with the regulator seeking to raise Kes.4Bn from each paper. A change in the trend for yields has occurred in the past week and this is expected to be maintained informed by the increase in interbank rates. Secondary Markets: An impressive improvement in the Fixed Income market as it shot up to a turnover of Kes.4.3Bn from Kes.605Mn on Monday. The FXD1/2012/5yr transacted Kes.2.5Bn; 59% of the total Bond Turnover.
Table 7: Short -Term Interest Rates, Treasury Notes & CDs
Tenor 91 Day 182 Day 1 Year 2 Year 5 Year 10 Year Kenya 7.65% 9.63% 10.34% 11.11% 11.86% 12.71% Uganda 10.02% 12.43% 12.01% 14.84% 15.39% 15.28% Tanzania 12.08% 12.83% 13.11% 13.81% 14.49% 14.99% U.S 0.10% 0.11% 0.18% 0.27% 0.68% 1.68% LIBOR (USD) 0.41% 0.70% 1.03% ----

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

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Currency: End Month Dollar Demand Suppresses the KES Performance: The KES weakened against all but one currency in Table 8. The only gain was in the INRKES at 0.09%. The largest losses were 1.41% against the ZAR and 0.28% in the GBP/KES pair. End month dollar demand seems to be exerting pressure on the local currency but rising interest rates should offer support to 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.

24th Sept 2012 84.87 137.65 109.90 10.23 29.75 18.59 1.60 27 Jan 2012
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25th Sept 2012 85.00 138.04 110.08 10.37 29.69 18.54 1.59 30 Jan 2012
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Technical Analysis and Outlook: The chart below shows the Bollinger Bands for the USDKES currency pair over the past year. The regulator has ensured little volatility in this currency Estimatespair through mopping up excess liquidity or selling USD directly in the open market.

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Genghis Index:

Table 9: Genghis Index Performance

Large-Cap Index

The index jumped 0.07% as Market Capitalisation improved to Kes.931Bn. The best performing counter in this segment was East African Breweries Ltd (NSE: EABL) up 2.69%. Losing by the biggest margin in this segment was Cooperative Bank Ltd (NSE: COOP) shedding 1.63%.
Mid-Cap Index

The Index shed 0.71% over yesterdays close as Market Capitalisation was relatively flat at Kes.146Bn. This sections best performer was Supermarkets Ltd (NSE: UCHM) up 2.35%. Uchumi

Losing by the biggest margin was Standard Group Ltd (NSE: SGL) down 7.07%.
Small-Cap Index Source: Genghis Capital

Price performance declined 0.21% with market capitalization stable at Kes.13Bn. Gaining by the biggest margin was Express Ltd (NSE: XPRS) up 5.26%. Losing by the biggest margin was Olympia Capital Holdings Ltd (NSE: OCH) shedding 6.94%.

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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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