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Recent Topicals

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Investment Options in the Kenyan Market

Mar 28, 2021

The COVID-19 pandemic has drastically affected all economies world over, leading to a 4.4% contraction in the world GDP for the FY’2020. This effects spread to the investment markets which saw major stocks markets across the world such as FTSE 100 decline. The Nairobi Securities Exchange was not spared with the NASI declining by 8.6% in 2020. This performance was mainly driven by a decline in the prices of large cap stocks such as Bamburi, Diamond Trust Bank, Equity Group and KCB Group which declined by 52.7%, 31.7%, 31.2% and 29.4%, respectively but the performance was cushioned by the 8.7% gains recorded by Safaricom. Key to note, Safaricom continues to be a key part of Kenyan equities portfolios, accounting for 51.1% of Nairobi Stock Exchange (NSE’s) market capitalization as at 26th Mach 2021. In light of these developments, we saw the need to revisit the topic on investment options in the Kenyan market to shed some light on the available investment options...

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Cytonn Note on the 29th March 2021 Monetary Policy Committee (MPC) Meeting

Mar 24, 2021

The Monetary Policy Committee (MPC) is set to meet on Monday, 29th March 2021, to review the outcome of its previous policy decisions and recent economic developments, and to decide on the direction of the Central Bank Rate (CBR). In their previous meeting held on 27th January 2021, the committee decided to reconvene on March 2021, while highlighting that they would remain ready to reconvene earlier if necessary, as they continue to closely monitor the impact of the policy measures. Additionally, the MPC maintained the CBR at 7.0%, citing that the accommodative policy stance adopted in March 2020, and all the other sittings since, which saw a cumulative 125 bps cut, was having the intended effects on the economy. This was in line with our expectations as per our MPC Note with our view having being informed by: Stable...

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Real Estate Investment Trusts (REITs) in Kenya

Mar 21, 2021

The Kenyan property market has witnessed significant growth over the past years, however in 2020, the real estate sector started on a rather high note but later the Covid-19 pandemic affected the performance real estate sector especially in terms of access to finance. Access to funds has been a key challenge for most real estate developers with most of them having relied on bank lending as a source of their funding. In order to bridge this gap, the real estate industry players have had to come up with various innovative products, e.g.  joint venture models and structured products to raise capital.  In helping bridge this gap and in a bid to further develop the Capital Markets, the Capital Markets Authority, CMA, in 2013 put in place REITs regulations that most developers can use to raise capital and we have seen some success stories already in the market. This regulatory framework has been in existence in Kenya for the past 8 years, and we have since done a topical on

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Financial Planning for Education

Mar 14, 2021

The year 2020 was marked by the occurrence of a global pandemic whose effects were felt globally. The tough operating environment during the year saw most firms scale down their operations leading to massive job losses and reduced income. With the disruptions occasioned by the pandemic, the World Bank estimates that close to 2.0 mn Kenyans were pushed into poverty in 2020 as people prioritized consumption and provision of basic needs with the little money they had. As such, most financial goals such as joining investments and savings schemes were also disrupted. These then meant that people have to go back to the drawing board and relook at their financial objectives and rework their financial plans by readjusting at the goals themselves and how the same shall be attained.  For most parents Education forms an integral part of their key financial goals and In our focus on

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Retirement Benefits Schemes Performance in Kenya

Mar 7, 2021

According to the Kenya National Bureau of Statistics (KNBS) FinAccess Report 2019, the pensions industry has witnessed significant growth with the number of registered members growing by a 10-year CAGR of 15.7% to 3.0 mn members in 2019, from 0.7 mn registered members in 2009. Additionally, Assets Under Management have grown by a 10-year CAGR of 15.8% to Kshs 1.3 tn as of December 2019, from Kshs 0.3 tn in 2009. This growth has been attributed to the mass education drives on the importance of retirement savings by the Retirement Benefits Authority and the industry players. Financial technology has also played a huge role by; i) making it easier for Kenyans to join and contribute to pension schemes, and, ii) improving the communication between the schemes and members. This week, we turn our focus to the historical performance and asset allocation of pension schemes in Kenya with a key focus on 2020....

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