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Recent Topicals

Cytonn Note on the Monetary Policy Committee (MPC) Meeting for November 2019

Nov 20, 2019

The Monetary Policy Committee (MPC) is set to meet on Monday, 25th November 2019, to review the outcome of its previous policy decisions and recent economic developments, and to make a decision on the direction of the Central Bank Rate (CBR). In their previous meeting held on 23rd September 2019, the MPC maintained the CBR at 9.0%, citing that the economy was operating close to its potential and inflation expectations remained anchored within the target range. The Committee also noted the prospective tightening of fiscal policy which would provide scope for accommodative monetary policy in the near term, thus the prevailing monetary policy stance remained appropriate. This was in line with our expectations as per our MPC Note, informed by the country’s macroeconomic fundamentals, which had remained stable as well as sustained optimism on the economic growth prospects, as evidenced by:

Kenya Listed Insurance H1’2019 Report

Nov 17, 2019

Following the release of the H1’2019 results by Kenyan insurance firms, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed insurance companies and the key factors that drove the performance of the sector. In this report, we assess the main trends in the sector, and areas that will be crucial for growth and stability going forward, seeking to give a view on which insurance firms are the most attractive and stable for investment. As a result, we shall address the following: Key Themes that Shaped the Insurance Sector in H1’2019, Industry Highlights and Challenges, Performance of The Listed Insurance Sector in H1’2019, and, Conclusion & Outlook of the Insurance Sector. Section I:  Key Themes that Shaped the Insurance Sector in H1’2019 The Kenyan economy expanded by 5.6% in H1’2019, lower...

Nairobi Metropolitan Area (NMA) Mixed-Use Developments (MUDs) Report 2019

Nov 10, 2019

Last year, we released the NMA Mixed-Use Developments (MUDs) Report 2018 that highlighted the performance of Mixed-Use Developments within the Nairobi Metropolitan Area in 2018. According to the report, MUDs performed better in 2018 recording average rental yields of 8.0%, 0.5% points higher than single-use themes average of 7.5%. Other than the retail sector, which recorded average rental yields of 8.5%, 1.0% lower than single-use retail, commercial office and residential themes within MUDs performed better with rental yields averaging at 8.2% and 5.6%, 0.3% and 0.6% points higher than single-use office and residential units which had market averages of 7.9% and 5.0%, respectively. This week, we update our report based on research conducted in eight nodes within the Nairobi Metropolitan Area, comparing Mixed-Use Developments’ performance against the market perfo...

Interest Rates Cap Is Kenya's Brexit – Popular But Unwise

Aug 21, 2016

This week’s focus note is about the ongoing debate on interest rate caps. The Kenyan public is lately very angry with Kenyan banks for a whole list of reasons - we have had recent bank failures but there isn’t a single ongoing prosecution, livelihoods and investment deposits lost or locked up in failed banks, investments lost in bank bonds such as Chase and Imperial Bank bonds, value of investments in bank shares have almost been halved, and yet banks continue to charge high interest rates on loans coupled with low interest rates paid on deposits. Trust for the Kenyan banking sector is at its most recent low. The anger has culminated in the Kenyan people delivering an interest rate cap bill that has broad base support and is now only awaiting presidential signing to become law. We compare the interest rate cap bill to Brexit – a very populist move, fueled by anger, but an equally unwise move that we may quickly regret.Our view is that interest rate caps would have a clear neg...

Technology & Investments

Oct 27, 2019

Technology has continued to be a disruption in the investment industry, both in Kenya and globally, thus, following our Fintech Impact on Kenya’s Financial Services Industry report on technology in financial services, in this week’s report we focus specifically on investments. One of the most tangible disruptions is the ability that technology provides to make investments easier to access, be it through a website or mobile phone. From the comfort of your phone, you can now access an investment company’s website or application, make an investment or withdraw an investment. This was not possible a few years ago where you had to visit a brick and mortar branch to create an investment account and manage your account. All these aspects of modern investing are relatively recent disruptive innovations being used by firms to remain competitive in a market where clients are no...