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Daily Market Note
26 September 2012
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Bloomberg: GNCP <GO>
www.genghis-capital.com

Equities Resilience – Theme of The Day… Low activity characterised today’s session but the NSE 20 maintained a flat performance closing at 3950.90. The NASi slipped 0.21 points to 86.22 while the FTSE 15 and 25 indices closed marginally lower at 114.34 and 116.80 points. Local investors returned to the market in droves accounting for 57% of the total NSE equity turnover. Even though foreign investors were overshadowed, they still maitained their long positions in most counters exhibiting the confidence surrounding the market. Equity turnover declined by 67% to Kes.285Mn though it should be noted that accumulation activities dominated trading today. Market Capitalisation was flat at Kes.1.14Tn. "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely." - Warren Buffett The highlights of the day’s trading activity are listed below:
Table 1: NSE Performance Table 2: NSE Indices

Top Traders Equity Safaricom Ltd CIC Insurance Group Ltd Equity Bank Ltd Kenya Commercial Bank Ltd Co-operative Bank of Kenya Ltd Volume 5,831,100 5,328,100 2,735,700 1,994,700 628,200

Market Indices Summary

Index NASI NSE 20 Share FTSE NSE 15 FTSE NSE 25 Source: NSE

Previous 86.43 3950.97 115.38 117.88

Today 86.22 3950.90 114.34 116.80

% change -0.24% 0.00% -0.90% -0.92%

Gaining Stocks Equity Olympia Capital Holdings Car & General K Ltd Kenya Commercial Bank Uchumi Supermarkets Pan Africa Insurance Price (KES) 3.50 24.00 27.50 17.85 36.75 % Change 4.48 3.23 2.80 2.29 2.08

The Advance/Decline ratio at the close of today’s trading session stood at 21/15 with 21 stocks advancing in price and 15 shedding prices. Foreign investor participation plummeted to 43% in today’s trading compared to 86% at the close of yesterday’s session. Today’s session resulted in a net outflow of Kes.3.34Mn compared to a net inflow of Kes.32.2Mn at the close of the previous trading session. The highest foreign investor turnover was recorded on Equity Bank Ltd (NSE: EQTY)–Kes.54.85Mn and Kenya Commercial Bank Ltd (NSE: KCB)–Kes.34.87Mn. The 2 counters accounted for 31.38% and 73.65% of the total NSE and total foreign activity respectively. Safaricom Ltd (NSE: SCOM) recorded the highest net inflow of Kes.5.62Mn. The highest net outflow was recorded on Athi River Mining Ltd (NSE: ARM) at Kes.2.5Mn.

Losing Stocks Equity East African Breweries Total Kenya Ltd Eveready EA Ltd KenolKobil Ltd Williamson Tea K Ltd Price (KES) 221.00 15.25 1.70 15.00 200.00 % Change -3.49 -3.48 -2.86 -1.96 -1.96

Daily Market Note
Table 3: NSE Summary

25th Sept 2012 Market Cap. (Kes.Bn) Equity T/O: (Kes.Mn) Local/Foreign Equity T/O: (%) Advance:Decline Ratio Bond T/O: (Kes.Mn) 1143.42 884.30 14.0/86.0 15:18 4267.50

26th Sept 2012 1140.64 285.91 57.0/43.0 21:15 4233.45 0.00 0.00%

% Change -0.24% -67.67% N/A N/A -0.80% N/A N/A

Sell/Buy Back Transactions T/O: 200.00 (Mn) Sell/Buy Back Transactions (% of 4.69% Total Bond T/O) Source: NSE & Genghis Capital Estimates

Table 4: Foreign Equity Turnover

Foreign Investor Equity Turnover 25th September 2012 Buys (Kes) 396,502,217.50 Net Inflow/(Outflow) Position Sales (Kes) 364,295,275.00 32,906,942.50 26th September 2012 Buys (Kes) 62,590,440.00 Net Inflow/(Outflow) Position Sales (Kes) 59,251,237.50 3,339,202.50

Source: NSE & Genghis Capital Dealers

The Investment sector was up 1.33% to reclaim the top spot, boosted by the performances of Olympia Capital Holdings Ltd (NSE: OCH) +4.48% to VWAP 3.50 trading 4,000 shares. The total index performance appreciated 0.16% on the back of greater influence in five segments. The Energy & Petroleum sector occupied the bottom spot losing 1.58% dragged down by Total Kenya Ltd (NSE: TOTL) which shed 3.48% to close at a VWAP of Kes.15.25.
Table 5: Daily Segmental Price Performance Analysis

Sector Investment Automobile & Accessories Insurance Construction & Allied Banking Telecommunication & Technology Commercial & Services Agricultural Manufacturing & Allied Energy & Petroleum Total Index Source: NSE & Genghis Capital

Constituents 4 4 6 5 10 2 9 7 9 4 60

Price Performance (% Change) 1.33 1.14 0.68 0.66 0.37 0.00 -0.01 -0.41 -0.56 -1.58 0.16

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Daily Market Note
Trading Ideas:
The table below shows the performance of selected stocks that Genghis Capital recommended in the year.
Table 6: Equity Picks (Fig in KES)
Company Centum Investments Ltd Equity Bank Limited KenolKobil Limited NIC Bank Limited EA Cables Ltd Athi River Mining Ltd Diamond Trust Bank Ltd KCB Group Ltd Uchumi Supermarkets Ltd Kenya Power & Lighting Co. Nation Media Group Ltd British American Investments Bamburi Cement Limited Cooperative Bank Limited Kenya Reinsurance Corp. KenGen Ltd Jubilee Holdings Ltd Housing Finance Ltd Scangroup Ltd Portfolio Return Source: Genghis Capital Ltd Price at Recommendation 14.55 15.80 9.80 26.50 11.80 156.00 88.50 18.50 7.20 15.85 153.00 4.00 168.00 11.55 10.05 8.30 163.00 13.65 49.25 12 Month Current Price Target Price 19.55 11.90 19.90 16.90 45.50 14.55 198.50 123.40 27.10 17.25 22.00 197.70 6.25 201.00 18.50 15.35 16.25 186.00 27.00 59.60 23.50 15.00 33.75 10.35 226.00 106.00 27.50 17.85 17.50 215.00 6.40 170.00 11.95 11.65 8.35 166.00 14.05 58.00 Upside Potential 39.13% -18.09% 11.24% 25.82% 28.87% -13.85% 14.10% -1.48% -3.48% 20.45% -8.75% -2.40% 15.42% 35.41% 24.10% 48.62% 10.75% 47.96% 2.68% Return to Date -18.21% 48.73% 53.06% 27.36% -12.29% 44.87% 19.77% 48.65% 147.92% 10.41% 40.52% 60.00% 1.19% 3.46% 15.92% 0.60% 1.84% 2.93% 17.77% 27.08% Recommendation

BUY SELL HOLD BUY BUY HOLD HOLD HOLD HOLD BUY HOLD HOLD HOLD BUY BUY BUY HOLD BUY HOLD

Fixed Income: Anticipated Uptick in Yields… Money Markets: The CBK was active in today’s session to mop up Kes.7.5Bn in excess liquidity through repurchase agreements and TADs as the interbank rate was up to 7.325%. Primary Markets: The 182-Day T-Bill was auctioned today. At the time of publishing the results were not yet released. The 91-Day T-bill will be auctioned tomorrow and we hold the notion that the uptick in yields will be maintained. Secondary Markets: A minimal decline in activity slipping 0.80% to Kes.4.23Bn. The 15-Yr GoK Fixed rate Bonds buoyed activity transacting Kes.2.42Bn; 57.2% of the total Bond Turnover.
Table 7: Short -Term Interest Rates, Treasury Notes & CD’s
Tenor 91 Day 182 Day 1 Year 2 Year 5 Year 10 Year Kenya 7.65% 9.63% 10.34% 11.11% 11.86% 12.71% Uganda 10.02% 12.43% 12.01% 14.84% 15.39% 15.28% Tanzania 12.08% 12.83% 13.11% 13.81% 14.49% 14.99% U.S 0.10% 0.11% 0.18% 0.27% 0.68% 1.68% LIBOR (USD) 0.41% 0.70% 1.03% ----

Source: CBK, BOU, BOT, US Treasury, BBA, Genghis Capital

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Daily Market Note
Currency: Higher Tea Prices Stabilizes KES … Performance: The KES posted marginal gains against the major currencies with the only loss posted against the USD; down 0.12%. The largest gains were in the EUR/KES pair up 0.98% and 0.96% gain against the GBP. Anticipation of a further rate cut in Uganda will see the KES strengthening against the UGX while strikes in the South African mines result to a high volatility in the ZAR/KES pair. The regulator’s continuous mop up through repos should cushion the KES against major loses due to end month dollar demand.
Table 8: Currency Rate

Currency Pair USD/KES GBP/KES EUR/KES ZAR/KES KES/UGX KES/TZS INR/KES Source: Bloomberg 4.00pm E.A.T, Genghis Est.

25th Sept 2012 85.00 138.04 110.08 10.37 29.69 18.54 1.59 27thJan 2012

26th Sept 2012 85.10 136.72 109.00 10.34 29.98 18.74 1.58 30thJan 2012

Technical Analysis and Outlook: The chart below shows the Bollinger Bands for the USDKES currency pair over the past year. The regulator has ensured little volatility in this currency Estimatespair through mopping up excess liquidity or selling USD directly in the open market.

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Daily Market Note

Genghis Index:

Table 9: Genghis Index Performance

Large-Cap Index

The index marginally improved 0.05% as Market Capitalisation declined to Kes.928Bn. The best performing counter in this segment was Kenya Commercial Bank Ltd (NSE: KCB) up 2.80%. Losing by the biggest margin in this segment was East African Breweries Ltd (NSE: EABL) shedding 3.49%.
Mid-Cap Index

The Index entered value territory up 0.22% over yesterday’s close as Market Capitalisation was relatively flat at Kes.146Bn. This section’s best performer was Supermarkets Ltd (NSE: UCHM) up 2.29%. Uchumi

Losing by the biggest margin was Total Kenya Ltd (NSE: TOTL) down 3.48%.
Small-Cap Index Source: Genghis Capital

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Price performance improved 0.10% with market capitalization stable at Kes.13Bn. Gaining by the biggest margin was Olympia Capital Holdings Ltd (NSE: XPRS) up 4.48%. Losing by the biggest margin was Williamson Tea Kenya Ltd (NSE: WTK) shedding 1.96%.

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Daily Market Note

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Daily Market Note

Contacts Report By: Moses Waireri,Research Analyst | Tel:+254 20 2774781 | Email: mwaireri@genghis-capital.com Report By: Evelyne Wanjiku, Research Analyst | Tel:+254 20 2774781 | Email: ewanjiku@genghis-capital.com Anthony Kimani, Research Analyst | Tel:+254 20 2774781 | Email: akimani@genghis-capital.com Report By: Kelvin Nyabando, Research Analyst | Tel:+25420 2774781 | Email: knyabando@genghis-capital.com George Guy,Fixed Income Dealer | Tel:+254 20 2774756| Mob: +254 727 142231 | Email: gguy@genghis-capital.com Nyawira Waithaka, Equity Dealer | Tel:+254 20 2774777 | Mob: +254 723 693481 | Email: nwaithaka@genghis-capital.com Andrew Maina, Senior Equity Dealer | Tel:+254 20 2774789 | Mob: +254 722 667936 | Email: amaina@genghis-capital.com
Disclaimer: The content provided on this document is provided as general information and does not constitute advice or recommendation by Genghis Capital Ltd and should not be relied upon for investment decisions or any other matter and that this document does not constitute a distribution recommending the purchase or sale of any security or portfolio. Please note that past performance is no indication of future results. The ideas expressed in the document are solely the opinions of the author at the time of publication and are subject to change without notice. Although the author has made every effort to provide accurate information at the date of publication all information available in this report is provided without any express or implied warranty of any kind as to its correctness. You should consult your own independent financial adviser to obtain professional advice before exercising any decisions based on the information present in this document. Any action that you take as a result of this information, analysis, or advertisement is ultimately your responsibility.

Genghis Capital Ltd, Prudential Assurance Building, Wabera Street, Nairobi.
Tel: +254 20 2774760Fax: +254 20 246334

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