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Kenya Most Preferred Country in the Frontier Markets Stocks Bet in 2019 – CITI

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Kenyan stocks have been rated as best options for investors among the frontier markets in 2019, despite growing concerns about the debt dynamics that can be affected by potential higher global interest rates.

The forecast has been attributed to Kenya’s reasonable economic growth, and acceleration in GDP growth, pushing expected earnings growth to above 15 per cent.

In its Frontier Markets in 2019 research, CITI points out that it expects Kenya to log a positive, if not stellar return this year.

“Kenya looks very cheap, especially relative to its history, while other factors are mostly in line with the rest of FM. Offsetting this are weak recent price momentum and a tightening in the interbank rate in recent months,” says the research by Andrew Howell, CFAAC and Vineet K Kheria.

The Kenyan economy is on an upswing as rising business confidence, higher agricultural sector growth and rising tourist arrivals mean the official forecasts of real GDP growth of above 6 per cent in the coming year now look credible.

 

 

 

 

 

 

 

Despite this, after a strong 2017, the Kenyan equity market slumped lower last year, as previous high-flyer Safaricom came under pressure along with other benchmark heavyweights, amid low trading volumes.

The strength of the Kenyan shilling seems to be deterring international investors; however robust FX reserves and strong capital flows into Kenya suggest that there is no imminent threat of devaluation, says CITI.

Last year, despite long-term bullish optimism projected for frontier markets due to an environment of maturing global growth, rising global equities and firm commodity prices, the annual performance tanked, with MSCI FM USD index declining by 16.2 per cent, including dividends, trailing all other regional indices.

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The corresponding result was disappointing earnings growth. The FM EPS growth forecast has fallen to 5.8 per cent, a big cry from the 2018 projected EPS growth of 13.2 per cent.

This represented FM’s worst annual performance since 2011, and its third consecutive year trailing the MSCI EM (Emerging Markets) index.

 

 

 

 

 

 

 

 

FM index is looking cheaper in 2019 than it has in some time, in contrast with a year ago when valuations were elevated.

“The frontier market has seen forward PEs come down to 10.7x, well below the 14x in mid-2017 and about in-line with the 5-year average,” says CITI.

Other top attractive countries supported by CITI’s ranking model in the frontier markets are Egypt, Romania, Argentina and Georgia while Kazakhstan, Vietnam and Morocco are the least attractive.

Market outflows continues to threaten the FM performance, exacerbated by stubbornly low trading liquidity in many stock. This constrains fund capacity and is acting as a deterrent to investors who wants to be involved in frontier markets.

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Outcry as people quarantined in hotels cite huge bills : The Standard

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Hundreds of people quarantined for observation for coronavirus are staring at huge bills following the directive extending their stay for another 14 days.
Among them is a family of five that is putting up at Pride Inn, a four-star hotel in Nairobi’s Westlands hub, whose bill has already hit Sh400,000.
Continued forced stay means the bill would double for the three rooms occupied by the family. 

SEE ALSO: China virus cases spike, 17 new infections reported

Extension of the quarantine period is linked to a supposed failure to observe the strict rules to avoid infection from the confirmed patients who have since been moved to hospital.
At the heart of the concerns is the failure by the observing medics in enforcing social distancing rules while unfairly punishing the diligent ones who followed the guidelines.
It also would raise major concerns whether the State should come in and subsidise the costs considering that these are unplanned expenses.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

Shakir Yassin, whose family jetted into the country on March 23 after a visit to Ethiopia, is devastated by the soaring hotel bill. His family had to cut short the trip to make it home within the window allowed by the State for returning citizens.
“It is going to be quite costly for us. I am really hopeful that we would be allowed to go home today,” Yassin told The Standard on phone.

SEE ALSO: China confirms virus spreading between humans

Daily cost for the three rooms is Sh28,000, an amount he said should have been more than sufficient to cater for police officers to ensure they self-quarantined in their home for the last two weeks.
He fears that the conditions at their hotel could actually be helping spread the virus, terming the facility as an “coronavirus incubation centre” rather than hotel.
Yassin’s concerns are echoed by Bonface Ombui who is putting up at a nearby hotel that is also on the list approved by the State as an isolation facility.
Ombui retraces his anguish to the day when he landed at the Jomo Kenyatta International Airport after a business trip to Nigeria.
“We were all lumped into the National Youth Service bus, without social distancing and very poor ventilation,” he laments.

SEE ALSO: Factbox: What we know about the new coronavirus spreading in China and beyond

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At his hotel, where two cases have since tested positive, the guests have been cleaning their own rooms but still paying the full rate of Sh9,200.
“It is unfair that they would be charging us as if we are on holiday here while it is not our wish,” Ombui said.
Mutahi Kagwe, the Health Cabinet Secretary, has since directed that the guests in hotel would stay on for another two weeks, regardless of the results of a test scheduled for today.
Guests in Ombui’s hotel had earlier yesterday written an appeal to the CS complaining about the decision to extend the quarantine.
“What evidence do you have that we have not been complying by the MoH guidelines? From our understanding, the only way to disprove this statement is by testing all of us again,” they wrote to the CS.

SEE ALSO: Travelers to be screened for ‘Chinese’ coronavirus- Government

Quarantine facilities where no one has tested positive are likely to have their subjects released within the week.


Are you suspecting that you have coronavirus? Before you rush to the hospital, do this quick easy self-assessment test. #StayHome #WashYourHands HERE.

coronavirusCoronavirus Kenya

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KPC joins coronavirus fight : The Standard

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Kenya Pipeline Company has joined the fight against the spread of coronavirus.

Managing Director Macharia Irungu said they had produced and dispatched free hand sanitisers to the counties from 185,000 litres of ethanol-blended from the initial 600,000 litres provided by different State agencies. 
“We usually do not produce hand sanitisers, but were able to flexibly and quickly adapt our facilities to be able to respond to this urgent need,” said Dr Irungu.


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Britam bounces back from Sh2.2b loss to book Sh3.5b profit : The Standard

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Britam Group Managing Director Dr. Benson Wairegi. [Wilberforce Okwiri/Standard]

Britam Holdings has returned to profitability after posting a Sh3.5 billion net profit for the year ended December 31, 2019.

The diversified financial services firm attributed the recovery from a Sh2.21 billion loss in the previous year to increased premium earnings and its international insurance business.
The Nairobi Securities Exchange-listed firm’s gross earned premiums rose by 17 per cent, while the international business contributed 19 per cent of the group’s insurance revenue.
Shareholders are now set to earn a dividend of 25 cents per share or Sh630.9 million after missing out on a payout the previous year.
“The group’s asset base has increased by 21 per cent to Sh125 billion from Sh104 billion in December 2018, while shareholders’ funds have increased to Sh29 billion, a 23 per cent growth from 31 December 2018,” said Group Managing Director Benson Wairegi (pictured), while announcing the results.
Mr Wairegi expressed optimism for the business this year, but acknowledged the rough road ahead owing to risks such as the Covid-19 pandemic, locust invasion and a decline in the stock market’s performance. “The Group is optimistic that there will be concerted effort to mitigate the effects of these adverse developments to the economies and the world at large,” he said.
The life assurance business returned 27 per cent after its embedded value growth to Sh16.9 billion, with Wairegi noting its profitability would “generate additional value to the shareholders in future”. Britam’s improved results were also backed by growth in investment income (dividend and interest income) owing to increased investment in high earning fixed income securities as well as stock market gains.

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The asset management business grew by 55 per cent in 2018 to Sh227 billion in 2019.


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Britam Holdings

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