Topicals



We research widely to deliver unique insights.


Recent Topicals

Diaspora Importance to Economic Growth

Jul 4, 2017

A diaspora is a group of people, similar in heritage and origin that have migrated out from their homeland, but still maintain a significant interest and connection back home. According to the United Nations, over the last 45 years, the number of persons living outside their country of birth has more than tripled from an estimated 75 million in 1960 to over 231 million in 2013, representing 3% of the world’s population. Out of this, 18.6 million are from Africa.In this investment opportunity focus, we wish to highlight the importance of the diaspora, their location, needs from an investment perspective, challenges when it comes to investment in Kenya, how private sector players such as Cytonn can position to be their trusted partner, and the ultimate benefits to the Kenyan economy. However, it is first important to showcase a country that has done well based on the effect of their diaspora, and we wish to showcase India.Diaspora remittances...

The impact of high interest rates on the Kenyan economy and Investments.

Jul 4, 2017

With the recent developments in Kenya’s interest rate environment i.e. (significant increase in yields on government securities and bank deposit rates), the key question in every investors mind is how this will impact the economy and the investments environment in the country. This week the government issued a 1-year bond at a yield of 19.1%, and the 91-day T-bill was at 18.6%. It is evident that interest rates have significantly moved higher in the recent past and we expect an increase across all tenors and this will be passed through to the rest of the economy e.g. bank loans. The last time such an interest rate environment was witnessed was in 2011; then the 91-day T-bill peaked at 20.6%. In 2011 the high interest rates had been driven by the weakness in the currency coupled with the high inflation rates where inflation rate reached a peak of 19.7%. The chart below shows a 5-year trend analysis of interest rates and inflation and of note is that in the current...

Mortgages in Kenya

Jul 4, 2017

According to the Kenyan Vision 2030, access to decent and affordable housing has been identified as one of the social pillars of economic growth. Within the Vision 2030 housing pillar, the mortgage finance initiative seeks to establish a secondary mortgage finance corporation as well as a national housing fund, which will also introduce housing and infrastructure bonds to help develop affordable housing.Kenya, a middle-income country, with a rebased per capita income of USD 1,160.0 has seen an expanding middle class, which has led to an increasing demand for housing. The ownership of houses in Kenya varies from cash purchases, own construction, or mortgage purchase options. Mortgage penetration in the Kenyan market remains low, currently standing at 4.3% of the GDP compared to developed nations, which usually are above 50%. Despite the low mortgage penetration rate, there are considerably good numbers of mortgage lenders in the country currently at 15, including banks and mic...

Cytonn’s H1’2015 Banking Report

Jul 4, 2017

Following the release of the H1’2015 results by banks, we carried out an analysis on Kenya’s banking sector to decipher any material changes from our Q1’2015 banking report. The aim of the analysis is to answer the question: from an equity investor point of view, which is the most attractive listed bank to invest in for the long-term? In Kenya there are a total of 42 commercial banks, 12 microfinance banks and 1 mortgage finance institution. The Central Bank of Kenya regulates all banks. The Capital Markets Authority has additional oversight over the listed banks, which are 11 in number. As at H1’ 2015, the banking sector recorded a slow-down in growth, growing at 8.3% compared to 15.6% in 2014, with the slowdown being attributed to poor economic performance on the back of increased non performing loans and the uncertainty in the interest rate environm...

Ruaka Real Estate Investment Opportunity

Jul 4, 2017

 Kenya has grown through the years to become East and Central Africa’s business and financial centre. Houses for sale in upcoming areas of Nairobi and its metropolis, where growth is centred, are highly sought after. The diverse population lends itself to providing a truly cosmopolitan city serving as the regional headquarters for some of the world’s largest corporations such as General Electric, Hewlett-Packard, Google, & Coca-Cola. Growth in the economy has had a profound positive effect on the middle class, who have benefitted greatly on the back of improved economic conditions, which has resulted in increased demand of residential housing outpacing market supply. Kenya’s residential property market in middle income category has seen a price surge resulting in the market outperforming most other asset classes in Kenya over the last 10 years.