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Recent Topicals

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Real Estate Listings in Kenya

Aug 14, 2016

Listed real estate investment stocks in Kenya have so far delivered a disastrous track record, subscriptions have been low and price performance post issuance has been significantly negative. Yet, real estate remains a very attractive sector driven by demand outstripping supply in the low to mid income segment. The Stanlib Fahari I-REIT achieved only 29% subscription, and is now trading at Kshs 13.75, 31.25% below its issuance price of Kshs 20. Additionally, the REIT has recently applied for regulatory extension to meet reporting obligations Home Afrika went public in 2013 at Kshs 12.0 per share and is now trading at Kshs 1.25, which is 89.6% below its issuance price, and, The Fusion D-REIT offering has been extended twice indicating failure to raise required amounts. There is little clarity on its closure which was scheduled for 4th August. A vibrant real estate capital market is essenti...

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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...

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Research Note on Kisumu Real Estate Opportunity

Aug 7, 2016

Following our previous research, where we sought to identify the opportunities in the Kenyan counties, we are carrying out research in different counties in Kenya. We shall be releasing research notes as we progress towards a comprehensive report on the performance of the real estate sector in major counties in Kenya. This week, we started with a research note on Kisumu.Kisumu is the third largest city in Kenya and the principal city in Western Kenya. It covers approximately 780 SQ/KM and has an approximate population of 434,661 people. The population is composed of locals, mainly of Luo, Kisii, Luhya, Nubian and Asian descents.Kisumu City’s main suburbs are, Milimani, Riat and Kajulu, which are dominated by high-end residential developments while Manyatta, High-rise, and Airport are mid-end residential settlements. Nyamasaria, Nyalenda and Kibos areas are dominated by low-end residential developments. The CBD is the commercial hub dotted with malls, mixed-use developm...

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Role of Talent in Our Economy

Jul 24, 2016

To transition to a mid-income economy, a low-income but developing economy, such as Kenya, has to implement a myriad of economic growth initiatives in order to achieve sustained economic growth that will translate to higher incomes and better standards of living. Such initiatives include (i) a generally enabling business environment, (ii) open markets allowing for the free flow of labor, capital, goods and services, (iii) a stable and democratic system of governance based on the rule of law, and (iv) a highly educated, entrepreneurial and innovative pool of talent, among other initiatives. This focus note discusses the role of talent in growing our economy in the context of our own experience at Cytonn and makes some suggestions on how to deepen our talent pool to improve our economy.Last week we officially launched our Cytonn Young Leaders Programme (“CYLP”), which is our core strategy for identifying, attracting and developing the very best talent we can ge...

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Kenyan Banking Sector Q1’2016 Report

Jun 19, 2016

Following the release of the Q1’2016 results by banks, we undertook an analysis on the Kenyan Banking sector to point out any material changes from the FY’2015 banking report. In our report, we recommend to investors which banks are the most attractive and stable for investment from a franchise value and from a future growth opportunity perspective.The report is themed “Transition continues, but to a new and different landscape” as the issues facing the banking sector, which is undergoing a transition, still persist. There are some key areas of transition, which will change the banking landscape in Kenya going forward: Continued Sector Realignment – In Q1’2016 we still are of the view that the industry is divided into the “haves” and “have-nots” which still poses a risk to the sector. During the month, Barclays bank expressed their wish to exit the...

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