Global and local market conditions
The developed stock markets were generally flat at the end of the week as strong corporate results were tempered by concerns about slow economic recovery. The Nikkei, S&P and FTSE indexes see-sawed in the week but finished roughly where they started at close of trade on Friday.
The Emerging Market performance was mixed with India’s Sensex falling 1.45% in the week while the Chinese and Brazilian markets rose. India’s stock exchange is more closely correlated with the West compared with the other two and has risen significantly in the year to date. Brazil is a big exporter of commodities to China and the current commodities boom has been very beneficial to its economy.
The indexes of the main Sub-Saharan Frontier stock markets: Nigeria, Kenya and Ghana all jumped over 2% in the week. Investors in the Kenyan market could be taking positions as various polls show that Kenyans will vote for a new constitution by a large margin.
Price movements of select commodities
Tea 0.00%, Sugar 4.73%, Coffee (Arabica ) 5.99%
(Sources: African Tea Brokers Ltd, Financial Times)
Arabica coffee is now trading at a 12 year high after a poor crop in Colombia (Financial Times). Arabica coffee futures are trading at 40% up in the year to date. The high coffee prices should have a positive impact on Sasini’s revenues this year.
Even after a steep fall two months ago, white sugar futures are trading at almost 5 year highs. The current high sugar prices coupled with the strong US dollar should shield Mumias Sugar from cheap imports in the medium term.
Mean Exchange Rates: Central Bank of Kenya
USD 80.23, GBP 125.30, EUR 104.87
The US Dollar weakened in the week against other convertible currencies as economic data showed that GDP growth had slowed to 2.4% in the quarter ended June 2010 compared to a 3.7% in the quarter ended March 2010 (Reuters).
NSE Movers Review
Top Gainers
Kakuzi 14.69%, Centum Investment 14.58%, Housing Finance 14.46%
Top Losers
Kapchorua Tea 3.45% Limuru Tea 3.33% Carbacid Investments 2.50%
Kakuzi Limited
Although the percentage jump in the week seems dramatic the movement is merely a recovery from recent drops in the last few weeks. Kakuzi is trading at a PE of only 4.73 at the current price which is cheap compared to the average NSE Market PE of 14.4.
Centum Investment
This share has bounced back after the heavy fall in the previous week. At the current price, the company appears fully valued and new investors should proceed with caution while purchasing this share. A continued rally in the market as a whole should push up value of Centum’s quoted investments portfolio, and if strong enough might justify a higher valuation for the share.
Quote of the week:
“Industry, thrift and self-control are not sought because they create wealth, but because they create character. “
Calvin Coolidge
