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Recent Topicals

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Update on Kigali Real Estate Investment Opportunity

Feb 25, 2018

Following Kampala Investment Opportunity research report, Sub Saharan Africa Financial Services Report and  Accra real estate investment research report, we continue to assess investments opportunities in the region, in our key focus areas of Real Estate, Banking, Education, Hospitality, and Technology to enable us  diversify our portfolio of investments and product range to our clients. In line with this strategy, we continue to conduct comprehensive research of various regional markets in Sub Saharan Africa. This report is an update to the 2016 Kigali market research with the 2018 data. Rwanda is one of the fast-growing countries in Africa at a GDP growth rate e...

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Kenya’s Public Debt, Should We Be Concerned

Feb 18, 2018

Over the last few years, Kenya’s rising public debt has been a point of discussion in most macroeconomic outlook discussions, with organizations such as the World Bank, the International Monetary Fund (IMF), global credit rating agencies (Moody’s Credit Rating Agency, S&P Global Ratings, and Fitch Ratings) and the African Development Bank (AfDB), among others, raising concerns. Most recently, on 14th February 2018, Moody’s downgraded the government’s issuer rating to “B2” from “B1” previously, based on the observation that as the country’s financing needs continue to grow and the government turns to external commercial loans to fund the deficit, more pressure is likely to mount on the government’s liquidity and therefore ability to repay arising liabilities in good time. The credit rating agency however retained a “stable” outlook supported by Kenya’s strong and relatively diversified economy. The National Treasury however refuted the rating, claiming the analysis was...

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Lessons for the Kenyan Retail Sector

Feb 12, 2018

According to the Kenya National Bureau of Statistics (KNBS), wholesale and retail trade is the 5th largest contributor to Kenya’s GDP and the 3rd largest contributor to private sector employment. In 2016, wholesale and retail trade employed 238,500 Kenyans and accounted for 8.4% of Kenya’s GDP. Moreover, according to Nielsen, a leading global information and measurement company, shifting consumer trends has driven growth in formal retail, with 30.0% of the Kenyan population now shopping in formal retail establishments compared to 4.0% in Ghana and 2.0% in Cameroon and Nigeria. This is the second highest in Sub-Saharan Africa after South Africa, which has a formal retail penetration of 60.0%. Given the recent challenges faced by two local players, this week’s Focus Note examines what led to their current distress and then draws lessons learnt, by looking at the following areas: Overview of Kenya’s Retail Industry, Analyzing th...

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Cytonn Annual Market Outlook - 2018

Feb 4, 2018

In 2017, the Kenyan economy remained resilient, despite a challenging operating environment, expanding by an average of 4.7% for the first three quarters of 2017, compared to an average of 5.7% in a similar period in 2016. The Kenya National Treasury, World Bank and IMF cut their 2017 GDP growth projections to 5.5%, 4.9% and 5.0% from 6.0%, 6.0% and 5.7%, respectively, at the beginning of the year, citing (i) slower growth of the agriculture sector, which grew by an average of 1.9% in the first three quarters of 2017 compared to an average of 5.0% in a similar period in 2016, following the prolonged 2016/17 drought, (ii) the interest rate cap, which led to a reduction in corporate earnings for commercial banks with EPS growth for Q3’2017 at negative 8.2%, compared to positive 15.1% in Q3’2016, (iii) political uncertainty during the year, and (iv) low private sector credit growth, which has averaged 2.4% in the first 10-months to October 2017 compared to a 5-year average of 14.4%. De...

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Why Stock Indices Performance Differ; A Case Study of NASI vs NSE 20

Jan 29, 2018

During the year 2017, the Kenyan equities market recorded strong performance with NASI, NSE 25 and NSE 20 gaining by 28.4%, 21.3% and 16.5%, respectively. This performance was driven by gains in large caps such as DTB, KCB Group, Safaricom, Equity Group and Co-operative Bank, which gained 62.7%, 48.7%, 39.7%, 32.5% and 21.2%, respectively. Looking at these indices an investor then wonders which among them is the right measure of the market performance. In this write-up, we seek to lay out what causes the discrepancies in returns and then conclude by pointing out what really is the best benchmark for investors to use when measuring performance. Introduction: An index is a statistical indicator or a measure of performance. According to FTSE Russell, a stock index is a group of securities chosen to track a particular investment scheme such as a market, asset class, sector, industry, or even a strategy. The collection of securities that make up the index are known as the ...

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