Diaspora: The Next Growth Frontier
Sep 11, 2016
In October last year, we had our first diaspora roadshow in the US, where our team visited several states and interacted with East Africans, who are eager to (i) know the opportunities available to them to invest back home, and (ii) find trusted partners with whom they can invest through back home. In two consecutive focus notes, we discussed the diaspora community and examined several learning and delivery points. In our Cytonn Weekly Report #40, 2015 we talked about diaspora contribution to economic growth, highlighting the importance of the diaspora, their location, needs from an investment perspective, challenges when it comes to investment in Kenya, how private sector players can position themselves to be their trusted partner, and the ultimate benefits to the Kenyan economy. In our Cytonn Weekly Report #41, 2015 we focused on how...Kenya Banking Sector H12016 Report
Sep 4, 2016
Following the release of the H12016 results by banks, we undertook an analysis on the Kenyan Banking sector to point out any material changes from the Q12016 banking report. In this 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, to a more regulated, yet innovative environment 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: Increased Regulation There has been a number of regulatory developments that seek to introduce more regulation within the banking sector. These include; The B...Impact of the Interest Rate Cap
Aug 28, 2016
As per our Cytonn Weekly Report #33, we noted that the Interest Rate Cap Bill was one fuelled by anger and we went further to compare the Bill to Brexit a very populist move, fuelled by anger, but an equally unwise move that we may quickly regret; and just like Brexit, it came to pass, with President Uhuru Kenyatta on Wednesday 24th August signing the Interest Rate Cap Bill into law.We were very surprised by the enactment; we did not think that the president would sign the Bill. But now that the Bill is law, this week we look at the effect of the Bill, what we expect going forward and what Kenyan banks should do to avoid any pitfalls.As can be witnessed in any developed economy, free movement of goods and services is essential to correct pricing mechanisms, determined by the forces of demand and supply....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...Interest Rates Cap Is Kenya's Brexit Popular But Unwise
Aug 21, 2016
This weeks 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 isnt 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...