Kenyan investment bank, Genghis Capital, has today, 21st January 2020, released a report predicting that the Nairobi Securities Exchange (NSE) will offer investment opportunities for the year 2020; presenting an opportunity to investors to continue diversifying their portfolios and post positive returns, in a year that is expected to post mixed economic results.
In a newly released playbook themed, “Harnessing Value”, the analysts note that the return of foreign investors to the NSE in 2019 after two years of massive foreign investor outflow, indicates rising interest in the local bourse as pricing remain attractive.
Kenya is currently trading at discounted multiples compared to its historical average despite last year’s market rally. The rally (bolstered by the banking sector and Safaricom in the fourth quarter of 2019) propped the Nairobi All Share Index (NASI) by 18.5 percent to 166.41 points.
It is on this backdrop that Genghis expects profit-taking on most of the counters that rallied last year to depress the equities market in the early part of the year before a general uptick in the market (on depressed prices from profit-taking) from the second part of the year. As at present, valuations are still attractive for some of the counters especially stocks that missed out on last year’s rally despite their attractive prices and strong fundamentals, the Genghis Capital Playbook 2020 reads in part.
“The NSE abounds with value opportunities, including some large-cap foreign investor favorites that continue trading at discounted prices. We see value in EABL and KenGen on the non-financials front and KCB Bank on the financial side” the report says further.
In the playbook 2020, the research team at Genghis Capital has revealed its new look model equity portfolio, which features momentum stocks, income stocks, and value stocks. In 2019, the three portfolios outperformed the market with returns of 39.2 percent, 38.4 percent and 10.3 percent from the respective portfolios. This was against the market returns of -6.3 percent on NSE-20 and 18.5 percent from the NASI.
“This year, we have recalibrated the portfolios; with investors who are looking to take advantage of momentum swings being advised to consider Safaricom, EABL, KCB Bank and Equity Bank while those looking for value stocks are advised to purchase EABL, KenGen and Kenya Re. Further, if one is looking for income, KCB Bank, Stanchart, Barclays Bank and COOP Bank and KenGen are their best bets,” the report states.
The report further predicts foreign investor inflows will […]