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Global Markets Review

Jan 6, 2019

The year 2018 was characterized by a flat global growth as the growth in the US was weighed down by the negative effects of the trade conflicts between the US, China and Eurozone, as well as a weaker outlook for some key emerging markets such as China and Brazil, arising from country-specific factors such as (i) country-wide industrial action in Brazil, (ii) political uncertainty in Britain due to the Brexit vote, and (iii) country-wide protests in France, tighter financial conditions, and geopolitical tensions. According to IMF, global GDP growth in 2018 is expected to come in at 3.7%, similar to the growth registered in 2017, and higher than the 5-year average of 3.5%. The IMF downgraded their expectations for global growth this year from 3.9% in June 2018 to 3.7% in October 2018, citing that the trade tensions between the U.S. and trading partners have started to hit economic activity worldwide. In terms of trade, the World Trade Organization (WTO) downgrad...

The Insolvency Act - A Second Chance for Struggling but Viable Businesses

Dec 30, 2018

In this week’s focus note, we look at the Insolvency Act 2015, and how companies that are under financial distress are using the legislation to navigate through the restructuring process, and in the process protect the interests of creditors, and other stakeholders in the company such as shareholders. Since its enactment in September 2015, a number of companies have invoked the Insolvency Act 2015, including Nakumatt Holdings, as discussed in our focus note Restructuring an Insolvent Business, A Case Study of Nakumatt Holdings, and Athi River Mining Cement (ARM) Limited, and Deacons East Africa PLC A business becomes insolvent when its liabilities exceed its assets. However, in practice, insolvency comes about when a business cannot raise enough funds to meet its obligations as they fall due. Properl...

Kenya’s Attractiveness as an Investment Destination, & Cytonn Weekly #49/2018

Dec 23, 2018

Africa remains an attractive investment destination for investors seeking attractive, long-term returns for a number of reasons, including abundant natural resources, improving economic indicators, and a growing population leading to a rise in consumption. GDP growth in Africa is expected to average 3.1% in 2018, higher than the 2.4% growth expected in advanced economies, according to the IMF. With West Africa generally suffering from volatility in commodity prices, and Southern African Development Community (SADC) having low GDP growth (1.6% in 2017), East Africa, whose economy grew by 5.9% in 2017, has emerged as an important and vibrant investment region in Africa due to a relatively diversified economy that contributes to stable economic growth. In addition to its strategic location as a gateway to the East African Region, Kenya hosts the largest expatriate community in the continent, has the most diversified economy in East Africa, and leads in terms of technological innov...

Kenya Listed Banks Q3’2018 Report, & Cytonn Weekly #48/2018

Dec 16, 2018

Following the release of Q3’2018 results by Kenyan listed banks, the Cytonn Financial Services Research Team undertook an analysis on the Kenyan Banking Sector to point out any material changes from our H1’2018 Banking Report. In our Q3’2018 Banking Report, we analyze the results of the listed banks in order to determine which banks are the most attractive and stable for investment from a franchise value, and from a future growth opportunity (intrinsic value) perspective. The report is themed “Deteriorating Asset Quality Dampens on Growth”, as we assess the key factors that influenced the improved performance of the banking sector during the period under review, factors that are dampening growth, and also areas that will be crucial for growth of banks going forward. As a result, we seek to answer the questions, (i) &...

Nairobi Metropolitan Area Serviced Apartments Report 2018

Dec 9, 2018

Last year, we released the Nairobi Metropolitan Area Hospitality Report 2017, which covered the performance of hotels and serviced apartments during that year. According to the report, the hospitality sector was temporarily affected by political tension during the electioneering period, and thus serviced apartments recorded 9.8% points decline in occupancy to an average of 72.0% in 2017, compared to 81.8% in 2016. Given the conclusion of the elections, the improved political environment in 2018 and increased marketing efforts by the Kenyan Government, we have seen an 8.3% growth in international arrivals into the country during the first 8-months of the year, and this is expected to positively impact on the hospitality sector. This week we therefore update our report findings on serviced apartments by covering the following; Overview of the...