NSE up ahead of MPC’s post rate caps meet

The Star (Kenya) - - News - ALY KHAN SAATCHU

The Cen­tral Bank of Kenya’s Mon­e­tary Pol­icy Com­mit­tee meets to­day for the first time since the In­ter­est Rate Cap­ping Bill was signed into law. The In­ter­na­tional Mon­e­tary Fund’s deputy man­ag­ing di­rec­tor Mit­suhiro Fu­ru­sawa said in Nairobi last week: “Link­ing de­posit and lend­ing rates to the Cen­tral Bank’s pol­icy rate may com­pro­mise the in­de­pen­dence of the cen­tral bank, and ham­per its abil­ity to en­act mon­e­tary pol­icy to­wards achiev­ing its main ob­jec­tives, that is to main­tain price and fi­nan­cial sta­bil­ity and to sup­port the econ­omy.”

Fu­ru­sawa warned that the “politi­ci­sa­tion of mon­e­tary pol­icy” bears risks for a sound fi­nan­cial sys­tem and for credit ac­cess, es­pe­cially to risky bor­row­ers.

“These would in­clude…in­ef­fi­cien­cies in the credit mar­ket… and un­der­min­ing the ef­fec­tive­ness of mon­e­tary pol­icy trans­mis­sion,” said Citi Global Mar­kets.

The Citi an­a­lysts said the Kenyan sit­u­a­tion called for a change in bank­ing mod­els be­cause the ex­tent of the rate cap was more dra­co­nian than in other coun­tries where such re­stric­tions have been put in place.

The bourse started on a pos­i­tive note yes­ter­day with the Nairobi All Share ral­ly­ing +0.66 points to close at 132.24.

The Nairobi NSE20 firmed 12.76 points to close at 3218.88.

Eq­uity turnover was sub­dued at Sh283.719 mil­lion.

Sa­fari­com firmed 0.539% to re­gain the Sh19.00 level and traded 2.168 mil­ion shares worth Sh41.237m. I have a year end price Tar­get of Sh22.50 which is an 18.42% rise through year-end.

Uchumi re­bounded 7.575% to close at Sh3.55 and traded 18,900 shares. Buy­ers out­paced sell­ers by a ra­tio of 9 to 1.

CfC Stan­bic Bank eased 2.53% to close at Sh77.00 and traded heavy vol­ume [ver­sus its mov­ing av­er­age] of 1.232 mil­lion shares worth Sh94.865 mil­lion. CfC has bucked the down­draft that has en­gulfed bank­ing stocks in 2016, and is in fact +2.024% on a To­tal Re­turn Ba­sis. CfC re­ported a 21.976% ac­cel­er­a­tion in half-year 2016, but that was be­fore the in­ter­est rate Bill was signed into law.

KCB Group re­bounded 0.95% to close at Sh26.00 and traded 570,300 shares.

Eq­uity Group which carved out an ag­gres­sive pos­ture last week [tak­ing the bat­tle to the likes of M-Sh­wari] closed un­changed at Sh25.50 and traded 1.257 mil­lion shares. The Stan­lib Fa­hari I-Reit ral­lied a fur­ther 5.33% to close at Sh14.80. Stan­lib Fa­hari I-Reit has ral­lied 34.54% this month, but re­mains mi­nus 32.72% year-to-date.

EABL ral­lied 3.54% to close at a sixweek high of Sh263.00 on a vol­ume of 50,100 shares. EABL was caught up in the bank­ing down­draft and still has more head-room.

ARM which is surely a big ben­e­fi­ciary of the in­ter­est rate cap, firmed 1.96% to close at Sh26.00 and traded 602,100 shares.

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