Market opens with microscope on Banks and foreign investors

Controlling 52 percent of the market, the Banking sector started the week as the center of focus after Moody’s Investors Service downgraded three Kenyan banks – KCB Group, Equity and Co-operative following the weakening of the credit profile of the government.

The downgrade was due to sizable holdings of sovereign debt securities exposing their creditworthiness to that of the government. The banks held a combined Sh270 billion in government securities as at Sep 2017.

Foreign investors started the week on a low having been exiting banking counters last week but started picking up the tab on yesterday after the market absorbed the implications.

“KCB has a global long-term deposit rating carrying a stable outlook, which balances the risks in the operating environment. The lender’s fundamentals remain strong, backed by solid capital ratios and a resilient retail and corporate business, ring-fencing its growth agenda,” Apex Capital said.

Standard Investment Bank said that by Monday, foreign investors turned net buyers (albeit marginally), recording net inflows of $0.2 million after fourteen straight sessions of outflows.

“The market witnessed 17.9 percent increase in foreign participation to 63.3 percent, the highest in 3 weeks,” SIB said.

Equity Bank, Safaricom, and NIC Bank recorded the highest net foreign inflows of $188,800, 119,500 and 24,500 respectively. On the other hand, KCB and EABL had the highest net foreign outflows of $60,500 and $56,400 respectively.

NSE 20 advanced 0.2 percent to end the day at 3,7198.47 points.

NSE 25 and NASI declined by 0.1 percent and 0.02 percent to 4,507.30 and 180.21 points respectively.