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Recent Topicals

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Global Market Review

Jan 3, 2021

Global Economic Growth  Global growth is projected to have contracted by 4.4%, according to IMF, World Economic Outlook (October 2020) led by the significant contraction of 5.5% and 3.3% for the developed and developing economies respectively.  The decline was largely due to the impact of COVID-19 more specifically: Worsening economic conditions as a result of COVID-19 infections leading to large disruptions in business activity than expected, Decline in consumption of goods and services as people had to rely on their savings due to loss of jobs and inactive business environment as well as effects from adhering to social distancing and movement restrictions set in place to reduce the Virus spread, Depressed mobility as both domestic and international travel, and, A contraction in global trade due to the measures put in place to control COVID-19 such as restricted movemen...

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Kenya’s Public Debt

Dec 27, 2020

Over the past few years, Kenya’s Public Debt has been on the rise, increasing from Kshs 1.3 tn 10 years ago to Kshs 7.1 tn now, at a 10-year CAGR of 18.5%. The rising debt has been brought about by the government’s significant borrowing to fund infrastructural projects and bridge the fiscal deficit that has averaged 7.7% of GDP since 2012, with borrowing being both direct and also by guaranteeing state corporations.  The debt mix currently stands at 51:49 external to domestic debt, respectively, compared to 45:55 external to domestic debt 10 years ago. With the current pandemic, the revenue collections have also been lagging and we expect more borrowing to bridge the gap, evidenced by the government’s plan to borrow USD 2.3 bn (Kshs 256.2 bn) loan from the IMF and up to USD 1.5 bn (Kshs 167.1 bn) from the World Bank. Key t...

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Nairobi Metropolitan Area Mixed-Use Developments (MUDs) Report- 2020

Dec 20, 2020

Last year in November, we released the Nairobi Metropolitan Area Mixed-Use Developments (MUDs) Report 2019, highlighting the performance of Mixed-Use Developments within the Nairobi Metropolitan Area and their comparison to single-use themes. According to the report, MUDs recorded an average rental yield of 7.3% in 2019 with retail, office, and residential themes within MUDs recording average rental yields of 8.4%, 7.9%, and 5.4%, respectively. This was in comparison to average rental yields of 8.0%, 7.7%, and 5.0%, for retail, office, and residential spaces, respectively, and an overall market average of 6.9% for single-themed developments. This week, we update our report based on research conducted in 8 nodes in the Nairobi Metropolitan Area, comparing the Mixed- Use Developments performance against the market performance of t...

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Kenya Listed Banks Q3’2020 Report

Dec 13, 2020

Following the release of the Q3’2020 results by Kenyan listed banks, the Cytonn Financial Services Research Team undertook an analysis on the financial performance of the listed banks and identified the key factors that shaped the performance of the sector, and our expectations of the banking sector for the rest of the year. Core Earnings per Share recorded a weighted decline of 32.4% in Q3’2020, compared to a weighted growth of 8.7% recorded in Q3’2019. As reported by most of the banks, the decline in the earnings was mainly attributable to the increased provisioning levels, as they covered for downgraded facilities, with the expectations of an increase in defaults across sectors on the back of the COVID-19 pandemic. Asset quality for listed banks deteriorated in Q3’2020, with the gross NPL ratio rising by 2.6% points to 12.4% from 9.8% in Q3’2019, and higher than the 5-year average of 8.5%. The banking sector was also keen on restructu...

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Nairobi Metropolitan Serviced Apartments 2020

Dec 6, 2020

In 2019, we published the Nairobi Metropolitan Area Serviced Apartments Report 2019, which highlighted that serviced apartments within the NMA recorded an average rental yield of 7.6%, 0.2% points higher than the 7.4% recorded in 2018, and this was attributed to a 2.3% increase in monthly charges per SQM, from Kshs 2,742 in 2018 to Kshs 2,806 in 2019, fuelled by the continued demand for serviced apartments by both guests on business and leisure travels. The improved performance was overally supported by the stable political environment and improved security, thus making Nairobi an ideal destination for both business and holiday travellers. This year, we update our report findings on the same by focusing on:

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