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Wednesday 20th of January 2016 |
Morning Africa |
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If you are tracking the NSE Do it via RICHLIVE and use Mozilla Firefox as your Browser. 0930-1500 KENYA TIME Normal Board - The Whole shebang Prompt Board Next day settlement Expert Board All you need re an Individual stock.
The Latest Daily PodCast can be found here on the Front Page of the site http://www.rich.co.ke |
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What Is the Post-Post-Davos Model of the World? BY JOHN CASSIDY Africa |
The oil price is in a free fall. China just announced its lowest G.D.P. growth rate in a quarter of a century. The European Union has been in crisis for years. The Middle East . . . enough said. Even the American economy, one of the world’s few bright spots, is showing some signs of slowing down.
Why, then, are the markets so disturbed? One possible explanation has to do with trading algorithms, which encourage trend-following and herding. Once stocks or bonds or oil prices make a sharp move, everyone piles on in the same direction, and the market’s over-all shifts are exaggerated.
At the moment, we seem to be on the cusp of such a shift, although even that is uncertain. It is conceivable that the optimists will be proved right, and that this is just a passing phase. If so, the post-Davos model will survive for another while. It is also conceivable that the pessimists will be proved right, in which case there are rough times ahead for the world economy, and someone will eventually have to construct a post-post-Davos model. The system will demand it: capitalism can’t run on pessimism.
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11-JAN-2016 2016 Starts With A Bang, @TheStarKenya Africa |
There is no Hail-Mary pass coming for the commodity producers, and from Abuja to Luanda, from Lusaka to Johannesburg, the denouement is still ahead and the risks of a disorderly break-down are spiking just like the Chicago Board Options Exchange Volatility Index.
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The Mellon Doctrine Africa |
Mellon became unpopular with the onset of the Great Depression. Herbert Hoover, in memoirs published decades later, wrote that Mellon advised him as President to "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate... it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people."
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Weak Pickup in Global Growth, with Risks Pivoting to Emerging Markets IMF WORLD ECONOMIC UPDATE Africa |
The pickup in global growth is weak and uneven across economies, with risks now tilted toward the emerging markets, says the IMF’s latest World Economic Outlook (WEO) Update.
Advanced economies will see a modest recovery, while emerging market and developing economies face the new reality of slower growth.
The WEO Update now projects global growth at 3.4 percent this year and 3.6 percent in 2017 (see Table), slightly lower than the forecast issued in October 2015.
“This coming year is going to be a year of great challenges and policymakers should be thinking about short-term resilience and the ways they can bolster it, but also about the longer-term growth prospects,” said Maurice Obstfeld, IMF Economic Counsellor and Director of Research.
Most countries in sub-Saharan Africa will see a gradual pickup in growth, but only to rates that remain lower than those achieved during the past decade.
These risks relate mostly to the ongoing adjustments of the global economy, namely China’s rebalancing, lower commodity prices, and the prospects for the progressive increase in interest rates in the United States. They include the following possibilities:
• A sharper-than-expected slowdown in China, which could bring more international spillovers through trade, commodity prices, and waning confidence. • A further appreciation of the dollar and tighter global financing conditions which could raise vulnerabilities in emerging markets, possibly creating adverse effects on corporate balance sheets and raising funding challenges for those with high dollar exposures. • A sudden bout of global risk aversion, regardless of the trigger, could lead to sharp further depreciations and possible financial strains in vulnerable emerging market economies. • An escalation of ongoing geopolitical tensions in a number of regions, which could affect confidence and disrupt global trade, financial flows, and tourism. New economic or political shocks in countries currently in economic distress which could also derail the projected pickup in activity. Commodity markets pose two-sided risks. On the downside, further declines in commodity prices would worsen the outlook for already-fragile commodity producers, and widening yields on energy sector debt threaten a broader tightening of credit conditions. On the upside, the recent decline in oil prices may provide a stronger boost to demand in oil importers, including through consumers’ possible perception that prices will remain lower for longer. “All in all, there is a lot of uncertainty out there, and I think that contributes to the volatility,” said Obstfeld. “We may be in for a bumpy ride this year, especially in the emerging and developing world,” he said.
Home Thoughts
“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.” ― George Orwell
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T.S. Eliot The Love Song of J. Alfred Prufrock Africa |
S’io credesse che mia risposta fosse A persona che mai tornasse al mondo, Questa fiamma staria senza piu scosse. Ma perciocche giammai di questo fondo Non torno vivo alcun, s’i’odo il vero, Senza tema d’infamia ti rispondo.
LET us go then, you and I, When the evening is spread out against the sky Like a patient etherized upon a table; Let us go, through certain half-deserted streets, The muttering retreats 5 Of restless nights in one-night cheap hotels And sawdust restaurants with oyster-shells: Streets that follow like a tedious argument Of insidious intent To lead you to an overwhelming question…. 10 Oh, do not ask, “What is it?” Let us go and make our visit.
In the room the women come and go Talking of Michelangelo.
The yellow fog that rubs its back upon the window-panes, 15 The yellow smoke that rubs its muzzle on the window-panes Licked its tongue into the corners of the evening, Lingered upon the pools that stand in drains, Let fall upon its back the soot that falls from chimneys, Slipped by the terrace, made a sudden leap, 20 And seeing that it was a soft October night, Curled once about the house, and fell asleep.
And indeed there will be time For the yellow smoke that slides along the street, Rubbing its back upon the window panes; 25 There will be time, there will be time To prepare a face to meet the faces that you meet; There will be time to murder and create, And time for all the works and days of hands That lift and drop a question on your plate; 30 Time for you and time for me, And time yet for a hundred indecisions, And for a hundred visions and revisions, Before the taking of a toast and tea.
In the room the women come and go 35 Talking of Michelangelo.
And indeed there will be time To wonder, “Do I dare?” and, “Do I dare?” Time to turn back and descend the stair, With a bald spot in the middle of my hair— 40 (They will say: “How his hair is growing thin!”) My morning coat, my collar mounting firmly to the chin, My necktie rich and modest, but asserted by a simple pin— (They will say: “But how his arms and legs are thin!”) Do I dare 45 Disturb the universe? In a minute there is time For decisions and revisions which a minute will reverse.
For I have known them all already, known them all: Have known the evenings, mornings, afternoons, 50 I have measured out my life with coffee spoons; I know the voices dying with a dying fall Beneath the music from a farther room. So how should I presume?
And I have known the eyes already, known them all— 55 The eyes that fix you in a formulated phrase, And when I am formulated, sprawling on a pin, When I am pinned and wriggling on the wall, Then how should I begin To spit out all the butt-ends of my days and ways? 60 And how should I presume?
And I have known the arms already, known them all— Arms that are braceleted and white and bare (But in the lamplight, downed with light brown hair!) Is it perfume from a dress 65 That makes me so digress? Arms that lie along a table, or wrap about a shawl. And should I then presume? And how should I begin? . . . . . . . . Shall I say, I have gone at dusk through narrow streets 70 And watched the smoke that rises from the pipes Of lonely men in shirt-sleeves, leaning out of windows?…
I should have been a pair of ragged claws Scuttling across the floors of silent seas. . . . . . . . . And the afternoon, the evening, sleeps so peacefully! 75 Smoothed by long fingers, Asleep … tired … or it malingers, Stretched on the floor, here beside you and me. Should I, after tea and cakes and ices, Have the strength to force the moment to its crisis? 80 But though I have wept and fasted, wept and prayed, Though I have seen my head (grown slightly bald) brought in upon a platter, I am no prophet—and here’s no great matter; I have seen the moment of my greatness flicker, And I have seen the eternal Footman hold my coat, and snicker, 85 And in short, I was afraid.
And would it have been worth it, after all, After the cups, the marmalade, the tea, Among the porcelain, among some talk of you and me, Would it have been worth while, 90 To have bitten off the matter with a smile, To have squeezed the universe into a ball To roll it toward some overwhelming question, To say: “I am Lazarus, come from the dead, Come back to tell you all, I shall tell you all”— 95 If one, settling a pillow by her head, Should say: “That is not what I meant at all; That is not it, at all.”
And would it have been worth it, after all, Would it have been worth while, 100 After the sunsets and the dooryards and the sprinkled streets, After the novels, after the teacups, after the skirts that trail along the floor— And this, and so much more?— It is impossible to say just what I mean! But as if a magic lantern threw the nerves in patterns on a screen: 105 Would it have been worth while If one, settling a pillow or throwing off a shawl, And turning toward the window, should say: “That is not it at all, That is not what I meant, at all.” . . . . . . . . 110 No! I am not Prince Hamlet, nor was meant to be; Am an attendant lord, one that will do To swell a progress, start a scene or two, Advise the prince; no doubt, an easy tool, Deferential, glad to be of use, 115 Politic, cautious, and meticulous; Full of high sentence, but a bit obtuse; At times, indeed, almost ridiculous— Almost, at times, the Fool.
I grow old … I grow old … 120 I shall wear the bottoms of my trousers rolled.
Shall I part my hair behind? Do I dare to eat a peach? I shall wear white flannel trousers, and walk upon the beach. I have heard the mermaids singing, each to each.
I do not think that they will sing to me. 125
I have seen them riding seaward on the waves Combing the white hair of the waves blown back When the wind blows the water white and black.
We have lingered in the chambers of the sea By sea-girls wreathed with seaweed red and brown 130 Till human voices wake us, and we drown.
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Kenyan Muslim who shielded Christians in al-Shabab attack dies BBC Law & Politics |
A Muslim teacher who shielded Christian fellow passengers when their bus was attacked by Islamist militants has died in surgery to treat his bullet wound. Salah Farah was on a bus travelling through Mandera in Kenya when it was attacked by al-Shabab in December. The attackers told the Muslims and Christians to split up but he was among Muslim passengers who refused. A bullet hit Mr Farah and almost a month on, he died in hospital in the capital, Nairobi. In previous attacks in the area, al-Shabab has killed Christians and spared Muslims. At the time, Mr Farah told the BBC's Bashkas Jugsodaay that attackers had offered him an escape. "They told us if you are a Muslim, we are safe. There were some people who were not Muslim. They hid their heads," he said. However, he recalled to Kenya's The Daily Nation that people were told to separate but they refused. "We asked them to kill all of us or leave us alone."
Conclusions
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24 AUG 15 China Roils The Markets @TheStarKenya International Trade |
“It’s totally premature to speak of a crisis in China,” a senior IMF Official told a press conference.
In my experience, when policy makers make these kind of pronouncements, it is exactly because there is a crisis.
“At the moment none of us can read China,” said the CEO of Glencore. I can and it is going to get a lot worse, I am afraid.
The further problem is that no one believes the data either. This moment when the market stops suspending its disbelief is seriously a dangerous one for policy makers.
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Currency Markets at a Glance WSJ World Currencies |
Euro 1.0950 Dollar Index 98.91 Japan Yen 116.97 Swiss Franc 1.0013 Pound 1.4153 The pound dropped as low as $1.4130, the weakest level since March 2009, and was down 0.6 percent at $1.4158 as of 4:10 p.m. London time. Aussie 0.6869 India Rupee 67.905 ndia’s rupee dropped, trading within 1.4 percent of its record low South Korea Won 1212.88 Brazil Real 4.0622 Egypt Pound 7.8295 South Africa Rand 16.8222
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Burkina Faso attack: new footage shows gunmen outside hotel an hour after assault began – video Africa |
Three gunmen, thought to belong to an al-Qaida affiliate known as AQIM, or al-Qaida in the Islamic Maghreb, are shown outside Ouagadougou’s Splendid Hotel and the nearby Cappuccino cafe during the attack on Friday evening. The assault on the hotel in Burkina Faso capital killed at least 30 people and left more than 50 wounded. Three jihadis can be seen standing next to burning cars a little more than an hour after the assault began raising questions as to why security forces took so long to respond
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IMF WORLD ECONOMIC UPDATE FULL REPORT Africa |
Most countries in sub-Saharan Africa will see a gradual pickup in growth, but with lower commodity prices, to rates that are lower than those seen over the past decade. This mainly reflects the continued adjustment to lower commodity prices and higher borrowing costs, which are weighing heavily on some of the region’s largest economies (Angola, Nigeria, and South Africa) as well as a number of smaller commodity exporters.
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Bond Pain in Emerging Markets Nowhere Worse Than in Africa Africa |
Emerging-markets bonds may be experiencing the worst start to a year on record but nowhere is the pain greater than in sub-Saharan Africa.
The world’s poorest continent accounts for half of the 20 worst-performing dollar bonds issued by developing nations in 2016. It’s also the only region in the world where not one country’s debt has produced a positive return, with African securities falling 5.4 percent this year, compared with the average 1.3 percent loss in emerging markets, the worst first two weeks of a year since Bloomberg began compiling data in 2010.
The malaise means governments will find it more expensive to issue debt just when they most need financing to plug budget deficits that are widening amid a plunge in prices for commodities from oil to copper. While rising yields might make African Eurobonds more alluring to investors, prices are likely to fall further because of global risk aversion and the slump in raw materials, according to Standard Bank Group Ltd., the continent’s largest lender by assets.
“You’re seeing particularly violent moves in African bonds because you have an investor base retrenching from frontier markets, and the underlying fundamentals of these countries are suffering,” Ray Zucaro, chief investment officer at RVX Asset Management, said by phone from Aventura, Florida, last week. “Given the backdrop of commodity prices and fear of rising dollar rates, it’s hard to envision a lot of issuance.”
Average yields on sub-Saharan African Eurobonds have surged to 9.4 percent, compared with 5.8 percent in April last year, according to the Bloomberg USD Emerging Market Sovereign Bond Index. Yields on dollar debt in Zambia and Ghana have climbed above 15 percent, with only Venezuela and Ecuador paying more among emerging markets.
“At these levels the markets are shut” for Ghana, Zambia and Angola, Claudia Calich, a money manager at M&G Investments, which holds securities in Zambia, Ivory Coast, Rwanda and Angola, said in an interview in London last week. “Their governments won’t be able to issue.”
Zambian notes are the biggest losers in Africa, with declines of more than 14 percent, the most among 61 developing nations tracked by Bloomberg after Venezuela. Overspending and falling copper prices helped push Zambia’s budget deficit to 6.9 percent of gross domestic product, from the targeted 4.6 percent, Finance Minister Alexander Chikwanda said in October. The country’s kwacha has weakened 42 percent over the past 12 months, the third-biggest decline among more than 150 currencies tracked by Bloomberg.
“We are sitting with large funding gaps and there are more questions about how these governments are going to raise the money to plug the gap,” Ridle Markus, an Africa strategist at Barclays Plc’s unit in Johannesburg, said by phone on Jan. 14. “Look at Zambia, for example. They had a dollar bond last year, we know that they’ll struggle on the fiscal side again this year and they will need some additional funds at a time when copper prices are quite low. So the question is: how are they going to raise the money?”
Economic growth in sub-Saharan Africa probably slowed to 3.8 percent last year, from 5 percent in 2014, accelerating to 4.3 percent this year, according to the International Monetary Fund. At least seven sub-Saharan African currencies, including South Africa’s rand and Angola’s kwanza, lost more than 20 percent of their value against the dollar since the start of last year.
“It doesn’t appear to be the right time” to be lengthening debt holdings in African Eurobonds, Dmitry Shishkin, a London-based strategist at Standard Bank, said in a note on Monday. “We would rather miss the turnaround in bond prices than try to pick the bottom. There are tentative indications, such as improving trading volumes, suggesting that we shouldn’t be too far away.”
Ghana’s parliament in December approved plans to issue as much as $1 billion in Eurobonds this year, while the Democratic Republic of Congo is preparing to debut almost $1 billion of debt on international markets, which Prime Minister Matata Ponyo said in December will be used to invest in projects that will help boost economic growth.
Nigeria may also sell debt for the first time since 2013 to fund a record spending plan, Finance Minister Kemi Adeosun said last month. Kenya is also gauging investor support for further issuance, the Financial Times reported on Jan. 14, citing Treasury Secretary Henry Rotich. African issuance in 2015 declined to $6.75 billion, compared with a record $8 billion a year earlier, according to data compiled by Bloomberg.
“The question is whether these countries can grow fast enough to repay their debt or whether they already have too much debt,” Antoon de Klerk, a fund manager at Investec Asset Management, said by phone from Cape Town on Jan. 15. “The answer lies in what they did with the money they borrowed over the past five years. Did they invest it in infrastructure, in which case there could be good results, or did they simply spend it on things like salaries, in which case it will be really difficult to generate high economic growth?”
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Zuma shows no understanding of the markets, says Mashaba Africa |
PRESIDENT Jacob Zuma seems to think the markets are "weird people in a dark room with computers", the Democratic Alliance’s (DA’s) Johannesburg mayoral candidate Herman Mashaba has said.
"(Zuma said) that the markets are overexaggerated. Does he understand who the markets are? For him the markets are some strange character, sitting in a dark room with computers manipulating the world," Mr Mashaba said.
"Now this is the man who is leading this modern economy. This is the man that’s leading the economy that’s... got the potential to be the shining light for Africa and the world, and look at where this economy is today," he said.
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South Africa last year had the least rainfall since records began in 1904 Africa |
South Africa last year had the least rainfall since records began in 1904, and the country’s corn production declined 30 percent last year to 9.9 million tons, according to the nation’s Crop Estimates Committee. Zambia’s harvest could drop by more than 30 percent this year to a seven-year low if current weather patterns persist, a farmers’ lobby group said Monday.
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Kenya plans spending cuts to curb surging budget deficit FT Subscriber Kenyan Economy |
The Kenyan government plans to cut spending by 1 per cent of gross domestic product in the next six months as it seeks to rein in its ballooning budget deficit and create “buffers” to counter emerging market turbulence.
East Africa’s largest economy, a net oil importer, has suffered less than many counterparts on the continent — notably South Africa and Nigeria — from tumbling commodity prices and the fallout of China’s faltering economy. Its currency has stabilised this year after falling 11 per cent last year.
But Henry Rotich, finance minister, told the Financial Times he was looking to slash up to Ks60bn ($590m) from the government’s budget for the financial year ending in June when he presents a supplementary budget next month. Kenya’s gross domestic product is about $60bn.
“As we go into the medium term [we need] to create some buffers, some fiscal space because we are now living in a world where there is a lot of vulnerability,” he said, adding that most of the cuts would be in recurrent expenditure. “Development projects where most of the jobs are created will not be heavily affected, apart from those that are delayed.”
Kenya’s decision to cut its budget mirrors that of South Africa, which is also trying to reduce public sector spending. Ghana, with help from the International Monetary Fund, is seeking to reduce its budget deficit.
In contrast, Nigeria has decided to increase spending in a bid to boost growth while leaders in Uganda and Zambia, which both face elections this year, are also lifting government spending.
Kenya’s development projects are centred around building a 600km railway from Mombasa on the coast to Nairobi and on to the town of Naivasha, at a total cost of $3.2bn.
Investors would welcome a Ks60bn spending cut, the equivalent of 10 per cent of the government’s recurrent expenditure, analysts say, particularly since the budget deficit has expanded from 2 per cent a decade ago to about 8 per cent now.
“The Kenyan government has had a bit of a spending problem for some time,” said John Ashbourne, Africa economist at Capital Economics in London. “The economy has not accelerated as much as the government expected a few years ago.”
Last October interest rates on government Treasury bills soared from 9 per cent to 23 per cent as investors worried the government was struggling to service its debt. The government secured a syndicated loan, and calmed the markets with help from the central bank, and Treasury bill rates have now returned to 10 per cent.
But Apurva Sanghi, the World Bank’s lead Kenya economist, said Mr Rotich should look to boost revenues by expanding the corporate and individual tax base, rather than cutting spending. “My team estimated that the government loses 2.6 per cent of GDP in terms of forgone revenues because of misaligned tax incentives,” he said.
Kenya’s missed its revenue target by almost 10 per cent, or Ks28bn, in the first quarter of this financial year, the state revenue authority said.
Mr Rotich acknowledged that economic growth, which is expected to be around 5.7 per cent in 2015, was at least two percentage points lower than it needed to be to create enough jobs for all those entering the labour market.
He is seeking to boost productivity through revising labour laws and enhancing the business environment, he said. “Reaching 10 [per cent economic growth] is achievable but we need to improve the business environment, get changes in the legal environment, the labour sector,” he said. “Agricultural productivity is an area [of] priority”
Kwame Owino, chief executive of Kenya’s Institute of Economic Affairs, said he thought Mr Rotich was too optimistic and that the economy was fragile despite a recent uptick in agriculture and tourism revenues, two key sources of foreign exchange.
“We have to be clear that the resurgence of the US economy and the recent rate hike did affect us even if people say it didn’t,” he said, pointing to recent outflows from the Nairobi stock exchange, company profit warnings and a weaker-than-expected trade balance. “Kenyans are resilient but it will become a much bigger issue if there’s another US rate hike.”
Mr Ashbourne of Capital Economics said that while “growth is not going to be as good as the government expected, compared to elsewhere in Africa it’s not doing badly”.
He added: “It is easy to be pessimistic about Kenya compared to its potential but it is likely to be one of the best performers in Africa.”
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N.S.E Today |
Points to consider from an article by John Aglionby and published in the Financial Times http://on.ft.com/1NjQPiJ
Mr Ashbourne of Capital Economics said that while “growth is not going to be as good as the government expected, compared to elsewhere in Africa it’s not doing badly”.
He added: “It is easy to be pessimistic about Kenya compared to its potential but it is likely to be one of the best performers in Africa.”
International Markets remain under severe Pressure with the Relief Rally yesterday lasting under 24 hours. The Dollar is grinding EM and Frontier currencies under foot. The Shilling is Teflon and was last trading at 102.40. The Nairobi All Share imported Volatility today and closed down -1.32% at 138.83. The All Share is outperforming its Peers but is -4.715% Year To Date. The Nairobi NSE20 broke down through the 3,800 level to close at 3796.49 -38.61 points. Equity Turnover clocked 837.002m. |
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N.S.E Equities - Agricultural |
Williamson Tea closed down 10% and Kapchorua Tea closed -9.82%. The Price Action is correlated to the Bonus shares which are being allocated at a Ratio of one bonus share for every share held.
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N.S.E Equities - Commercial & Services |
Safaricom closed -2.173% at 15.75 and traded 7.618m shares. I wish the CEO Bob Collymore a very Happy Birthday and am of the opinion that you remain structurally long Safaricom and pick it up on dips such as these.
WPP-ScanGroup saw heavy volume action and firmed +0.9% to close at 28.00 and traded 3.032m shares [0.797% of its issued shares] which is a material position.
'The next 18 months are crucial for @KenyaAirways,” the KQ boss Mbuvi Ngunze was quoted as saying. We also learnt that Kenya Airways has sent the finance boss home and retired its fleet chief. Kenya Airways shaved off -1.03% to close at 4.80. Its good to see Mr. Ngunze make his move now. Demand outpaced Supply and we could see an attempt to vault 5.00.
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N.S.E Equities - Finance & Investment |
Kenya Commercial Bank was the most actively traded share at the Securities Exchange and closed -2.59% at 37.50 and traded 6.935m shares worth 260.485m. KCB was trading at 38.00 and above the closing price at the Finish line. 40.00 is the Key Price Pivot and KCB will return above that level as soon as the market turns. Equity Group retreated -2.53% to close at 38.50 and traded 3.697m shares. Like KCB, Equity was trading at 39.00 and higher than its closing price at the Finale. In both cases, evidently size was traded with a discount. Diamond Trust Bank firmed +2.82% to close at 182.00.
NIC Bank was marked down -8.77% to close at 39.00 and traded 23,600 shares.
Centum closed unchanged at 46.00 and traded 749,300 shares. Centum was trading at 46.75 +1.63% at the closing Bell.
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N.S.E Equities - Industrial & Allied |
BAT firmed +0.249% to close at 804.00 and on good volume. BAT traded 65,100 shares and has been seriously resilient this Year.
I look forward to hosting Albert Mugo the MD and CEO of Kengen and some of his key Officers at Mindspeak this Friday from 1700 hours. KenGen traded 4.633m shares and closed -8.33% at 5.50. This Price is unfathomable and KenGen is egregiously priced. Come and Engage with Albert on Friday.
Unga was the biggest Winner at the Exchange and rallied +8.59% to close 34.75.
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