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Recent Topicals

Education Investment Plans in Kenya

Feb 16, 2020

This week, we seek to analyze education investment plans, why one should invest in an education plan, some of the options available for investors and the various factors that come into play when selecting an education plan. We also focus on asset allocation strategies that fund managers employ when investing the funds in education investment plans. We do this in six sections as follows: Background of Education Sector and Laying of Context, Enrolment and Literacy Statistics Globally and in Kenya, Constitution of Education Investment Plans, Key Things to Consider before Joining an Education Investment Plan, Alternatives to Education Investment Plans, and Conclusion Section 1: Background of Education Sector and Laying of Context Education is a key aspect in any economy, with the Kenyan government making significant allocations towards education expenditure in every fiscal year. Ove...

Master-Planned Communities

Feb 9, 2020

Homebuyers in the residential and hospitality markets, which have experienced tremendous change over the years, are now keen on serene locations and developments that provide them with comprehensive lifestyle amenities such as retail center, gym, clubhouse, open community spaces, and a swimming pool; with the choice of housing having shifted from the traditionally preferred bungalows to Master-Planned Communities. When you think of a master-planned community, what comes to mind? Things like massive developments, security, safety and exclusivity will probably feature somewhere on that list. But what else lies behind those beautiful gates and the seemingly perfect quaint homes? The concept has been gaining significant popularity in the Kenyan market, during the week, Cytonn’s master-planned development affiliate, Superior Homes Kenya, launched their hospitality master-planned community, Pazuri at Vipingo, situated at the exclusive Vipingo Ridge. Therefore, for this week,...

Sub-Saharan Africa (SSA) Eurobonds: 2019 Performance

Jan 31, 2020

Africa’s appetite for foreign-denominated debt has increased in recent times with the latest issues in 2019 being South Africa, Ghana, Egypt, Benin and Kenya. Collectively, 2019 has seen the African continent as a whole raise USD 17.4 bn through the various Eurobond. The increased affinity for foreign currency-denominated debt continues to be attributed to: Financing of maturing debt obligations, The need to finance heavy infrastructure projects, Reduced financial aid to African countries by Western donor nations, and Covering for budget deficit This note analyses SSA’s Eurobond performance in the year 2019 with the aim of painting a picture of the investor confidence and risk tolerance, and an outlook on yield performance for the year 2020. The analysis will be broken down as follows: Background of Eurobonds in Sub Sahar...

Is There a Real Estate Bubble in Kenya?

Jan 26, 2020

In 2017 we reviewed the real estate industry and prepared two topical pieces, Is There a Real Estate Bubble in Kenya? and What Real Estate Bubble?, addressing speculations that the property market was experiencing a bubble. According to the two topical reports, the Kenyan real estate market was still in its nascent stage and was just being institutionalized. The Kenyan market was thus, not experiencing a bubble but the normal real estate cycles of rising demand, peaking market, falling market then bottoming out. The rapid price increments witnessed were attributed to the real estate market being in the rising phase that was characterized by low supply and high demand leading to an increase in prices. This week, we revisit the topic by reviewing the current state of the market. It is evident that the...

Cytonn Note on the Monetary Policy Committee (MPC) Meeting for January 2020

Jan 22, 2020

The Monetary Policy Committee (MPC) is set to meet on Monday, 27th January 2020, 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 25th November 2019, the MPC lowered the CBR by 50 bps to 8.5% from 9.0%, citing that the economy was operating below its potential level concluding that there was room for accommodative monetary policy to support economic activity. This was in line with our expectations as per our MPC Note, with our view being informed by: The need to stimulate growth, with GDP growth in 2019 having slowed down averaging 5.6% in H1’2019 lower than 6.4% in H1’2018 and below the CBK’s estimated growth at 6.3%. With the plans of the continued fiscal consolidation by the Government,...