NAIROBI, Kenya, Feb 5 – The massive foreign investor outflow from the Nairobi Securities Exchange (NSE) in the last two years now presents a perfect opportunity to invest at the bourse because of the low prices, analysts at investment firm Genghis Capital predict.
The analysts, in a report titled ‘Embracing Value‘ noted that Kenya is trading at attractive multiples on the back of a massive sell-off in 2018 which saw the NSE 20 share index take a 23.5pc beating to close at 2,833 and the Nairobi All Share Index (NASI) decline 16.6pc to 86.47 points.
Genghis reckons that the valuations are now attractive, presenting an excellent entry point for most stocks which previously traded at a premium to intrinsic value.
“The NSE abounds with value opportunities, including some large-cap foreign investor favorites that have previously traded at a premium. We see value in Safaricom and Bamburi on the non-financials front and KCB Bank and Equity Bank on the financials side, currently offering great entry points and significant upside,” the report further said.
Analysts said investors looking to take advantage of momentum swings should consider Safaricom, EABL, KCB Bank and Equity Bank while those looking for value are advised to purchase KCB Bank, Bamburi and Kenya Re.
“Further, if one is looking for income, KCB Bank, Stanchart, Barclays Bank and Stanbic are their best bets, with KCB Bank on the lower side of the dividend yield at 7.4pc and Stanchart on the higher side at 8.7pc,” noted the report.
According to this playbook, Kenya will be the proverbial eagle in 2019, rising from the ashes of political uncertainty, a biting credit crunch that stifled private sector growth, constrained corporate earnings growth, poor corporate governance that resulted in the near collapse of retail and manufacturing giants and a massive foreign outflow at the NSE to the tune of USD 292m (KES29.2 billion).
“In our opinion, Kenya looks attractive compared to other African counterparts including Nigeria which is still grappling with forex challenges and upcoming elections that may see a further flight of capital potentially to Kenya,” the report indicated.