Trading drops despite Central Bank’s move to retain policy rate

 

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In Summary
Home Afrika remained unchanged last week at Sh11.15. The real estate developer is down over 50 per cent from its highest point this year
Kenya airways dropped 2.64 per cent to end at Sh9.2 after news of its Tanzanian subsidiary, Precision Air announcing a net loss in the year ending March 2013

 By Rufus M. Mwanyasi
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The NSE 20 Share Index rose 0.24 per cent in the previous weekly session to stand at 4,708.95 points. The rally was supported by the Central Bank’s decision to hold the policy rate at 8.5 per cent.

However the market still remains sceptical on full recovery especially considering the drop in traded volume. The number of shares traded stood at 107 million against 248 million the previous week while week on week turnover declined to Sh2.2 billion from Sh4 billion.

Home Afrika remained unchanged last week at Sh11.15. The real estate developer is down over 50 per cent from its highest point this year. The market seems to have shunned the firm at least in the interim as it seeks for a resolution regarding investing in the company. The firm recently announced a funding plan via Real Estate Investment Trusts (REITs) in order to finance its projects within the country and in the region.

Uchumi Supermarkets marked its 2.5 straight month trapped within the Sh19-Sh20 narrow band. The retailer now spots a consolidation pattern that gives no clear market position on the way forward. Possibly the announcement of a rights issue scheduled to take place in the next quarter may finally shift the price.

Traders expect a downward move as the new 100 million shares create a downward pressure on the price. The firm plans to raise at least Sh1.5 billion in order to finance opening of new branches within the wider East African region.

Kenya airways dropped 2.64 per cent to end at Sh9.2 after news of its Tanzanian subsidiary, Precision Air announcing a net loss in the year ending March 2013. The loss totalled Sh1.65 billion as a result of rising aircraft maintenance costs and staff costs.

The airline now plans to cut back on its expansion strategy and could ask for restructuring funding in order to reduce its debt burden. KQ has a 41.2 per cent shareholding in the subsidiary. The aviation business in the region has suffered immensely due to rising fuel costs and stiff competition. The emerging Syrian crisis is set to keep the pressure on the bottom line as a result of increasing oil prices.

Longhorn Kenya pulled up 11.11 per cent to settle at Sh14.5. The publisher is up 61.1 per cent since July following news of its planned investments in Somalia as a way to diversify its revenue. The stock is now hovering around the Sh13-Sh14 region as it tries to find stability at this levels. The Kenyan market accounts for 80 per cent of its revenues.