Regal Report 21st Issue Q1 2019

REGAL REPORT WEALTH NEWS

21 ST ISSUE: 1ST QUARTER REPORT 2019

FINTECH THE FUTURE OF INVESTING HOW AFRICAN’S CAN ERADICATE POVERTY SUSTAINABLY

OUR TRANSACTION ADVISORY SERVICES ARE UNMATCHED.

Regal Africa Consulting Group is a boutique Investment Advisory and Management Strategy firm, that offers Transaction advisory and Strategic advisory services in East Africa.

We are an independent firm with a network of investors, lending institutions and other partners,which helps us provide the most optimal cost of capital for our clients. We work with highly scalable businesses to plan for and acheive growth. This always requires a customized approach - we tailor our work based on individual business requirements in order to achieve the best results in the most cost effective way.

We ensure that our financial and strategy recommendations are based on the best options in the market.

Mergers & Acquisitions Capital Raising Corporate Restructuring Company Strategy & Innovation Market Research & Analysis Executive Training Regal Africa Group 4th Floor Top Plaza, Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 www.regalafrica.co.ke info@regalafrica.co.ke

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Word from the C.E.O Money Market Analysis Equity Market Analysis Balanced Funds Analysis Fintech the future of investing How Africans’ can eradicate poverty sustainably

Report Created BY: D.Gaitha Creative Studio www.dgaitha.com

WORDS FROM THE C.E.O Dear Regal Client, We can all be WEALTHY, It takes a Plan, Discipline and Execution to create and manage your wealth.

We at the Regal Africa Group are excited about the new direction that we are taking to introduce the use of Technology in taking up our financial services thus ensuring that our clients have access to the best investment information, education and the ability to take up the best investment options 24/7 and 365 days a year from anywhere in the world. We are introducing EastGold which is our Fintech subsidiary.

The Regal Africa Group team will continue to recommend to our clients the best financial and investment products that are backed with the best data from research, so as to help you to make better informed financial decisions. We wish you well on your Wealth Creation Journey.

Anne Wambui Gaitha

Founder and CEO of Regal Africa

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Q1 2019 MONEY MARKET ANALYSIS Interest rate on money market securities continued to gradually decline during the quarter with the main cause of this decline being higher levels of liquidity in the interbank market. The average interbank rate (the measure of liquidity in the banking sector) for the quarter stood at 3% compared to 5% in the previous quarter indicating that the flow of money in the banking sector had improved.

As a result of the improved liquidity the demand for government securities increased as evidenced by the bids received for T-bills during the quarter which stood at 157% compared to 74% in the previous quarter as banks who are the largest investors in government debt. Therefore, the increased demand for T-bills led to a decline in the yield offered by government securities as the Central Bank could cherry pick what it deemed affordable and rejected what it deemed expensive. The yield on the 91, 182 and 364 day T-bills stood at 7.500%, 8.204%, 9.408% compared to 7.342%, 9.002% and 9.952% as at the end of 2018 respectively.

Despite the decline Treasury bill interest rates, the average yield of money market funds increased marginally to 8.63% from 8.10%, this was as a result of a few money market funds that were introduced in the market during the quarter whose returns were higher than the current money market funds. .

Money Market Funds’ Return in Q1 2019 The graph below shows money market funds return for the 5 best performing funds in Q1 2019

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Money Market Funds Return for the past 6 months.

The graph below shows money market funds return for the 5 best performing funds in the past 6 months.

Money Market Funds Return for the past 12 months.

The graph below shows money market funds return for the 5 best performing funds in the past 12 months.

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Q1 2019 EQUITY MARKET ANALYSIS The equities market started the year on a strong note however the momentum fizzled out slightly in February and picked up again precipitated by foreign investor buying.

The NASI, NSE 20 and NSE 25 were up by 12%, 0.4% and 11% respectively with large caps with the exception of BAT notching price gains.Following the pause in rate hikes by the US Federal reserve and increased risk appetite for emerging and frontier market equities, foreign investors turned net buyers during the quarter for the first time within the last two years, net foreign inflows stood at USD 8m.

Dividend chasing investors coupled with increased foreign investor activity saw market turnover increase to USD 449m from USD 344m in the previous quarter.

The improved performance from equities resulted in the average return for Equity Funds increasing to 5.33% compared to -4.45% in the previous quarter.

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The table below shows the 10 best performing stocks at the NSE year to date;

31/03/2019 7.50 6.34 113.50 36.35 27.55 41.60 2.50 206.25 44.05% 18.70

Express Longhorn Kenya I&M Holdings NIC Bank Safaricom Equity Bank Olympia Capital EABL KCB E.A Portland

YTD Return 50.0% 37.5% 33.5% 30.8% 24.1% 19.4% 19.0% 18.0% 17.6% 16.9%

The table below shows the 10 worst performing stocks at the NSE year to date;

31/03/2019 4.91 0.56 544.00 9.78 11.00 5.64 16.00 0.57 24.35 130.00

Kenya Airways Uchumi Supermarket BAT Kenya Liberty Kenya Holdings Kenya Re Insurance KenGen Sasini Home Afrika Standard Group Diamond Trust Bank

YTD Return -44.8% -30.0% -25.0% -24.2% -21.1% -19.7% -19.6% -18.6% -17.5% -16.9%

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EQUITIES FUNDS ANALYSIS Q1’2019 The graph below shows the return of the 5 best performing equity funds in Q1’2019

EQUITIES FUND 6 MONTHS ANALYSIS The graph below shows equities funds return for 5 of the best performing funds in the past 6 months.

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EQUITIES FUNDS 12 MONTHS ANALYSIS The graph below shows equities funds return for 5 of the best performing funds in the past 12 months.

Q1’2019 BALANCED FUNDS ANALYSIS The Treasury bond market also felt the effects of the improved liquidity in the market. The subscription rate for bonds offered in primary auction increased to 147% from 65% in the previous quarter. In order to bring interest rates down, the Central Bank only accepted 57% of what investors bid in the primary auction, this led to activity in the secondary market to increase to KES 131bn from KES 108bn in the previous quarter as investors sought short and medium term papers. As a result of the declining yields, the NSE FTSE Bond Index increased by 1.3% during the quarter as bond prices have an inverse relationship with yields.

An increase in the valuation of bonds by 1% coupled with the improved performance by equities during the quarter, the average return by Balanced Funds stood at 1.85% compared to -2.64% in the previous quarter.

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The graph below shows balanced funds returns for 5 of the best performing funds in Q1’2019

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BALANCED FUNDS 6 MONTH ANALYSIS The graph below shows bond funds return for the past 6 months.

BALANCED FUNDS 12 MONTH ANALYSIS The graph below shows bond funds return for the past 12 months.

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FINTECH THE FUTURE OF INVESTING

By Anne wambui Gaitha

We at the Regal Africa Group believe that fintech platforms will be the best innovations in the future as technology will be used to offer financial services easily and make it very accessible to the masses at a fraction of the cost and time spent offering the same services in a high touch, bespoke experience.

The fintech pioneers who will be able to offer solutions in credit, payments, banking, investing, insurance and other financial solutions in Africa will definitely reap big and at the same time improve lives through financial inclusion.

We see the fast growth of mobile lending which has become very popular in Kenya and we understand that clients are willing to pay higher charges to get faster and easier access to credit, this is a great innovation that will ensure that banks will need to continue to innovate and partner with fintech companies if they are looking to access more MSME and individual clients.

In the case of payment platforms there are various options in the market which enable clients to pay for goods and services using mobile money, debit cards and credit cards. Again we see more opportunities in this fintech space as global trade and e-commerce grows and the establishment of crypto currency and virtual cards. The use of bitcoins as a medium of exchange continues to grow as more new currencies are created, we are seeing that less virtual cards have been created or are being used and we believe that this is the future, especially in Africa where people are not used to plastic cards but prefer to use cash or mobile money to make purchases.

Digital banking is the future, especially in the retail market. More and more people continue to do transactions on their mobile phones or online and never go into a physical bank branch unless they want to speak to a manager or resolve a complex transaction. With the development of better banking solutions and services online, then you will see that digital banking transactions will outperform brick and mortar service. We can see this in Kenya where year on year the trend of transactions continue to be digital. Basically the future of banking is not face to face transactions and the bank that is able to create a seamless operating system that is trustworthy to the masses will reap big in this space. pg 13

Continued from page 13 Digital saving and investing seems to be lagging behind but we at the Regal Africa Group believe that there lies the opportunity especially for women and youth of Africa who are only able to save very little daily, weekly or monthly they do not have a platform that caters to them. We at RAG are currently offering the GrowPesa100 product (Currently in pilot stage) where for as little as Ksh 100 or $1/day a client can gain access to an investment account, Pension account and health insurance in Kenya. Using technology to deliver these financial products and services is critical to reach the masses and ensure that everyone has the opportunity to create wealth. We also believe that the development of Robo Advisors will be a great opportunity in the future for the growing middle class and affluent clients at a fraction of the cost that current wealth advisors charge and this will encourage more people to take up this service. Online and mobile brokers will be a great addition in the future, especially for the youth who are interested in trading in the stock market. We are seeing more and more digital solutions by stock brokers and investment banks and we believe that this is the solution for the increase uptake of equity trading by the retail investors in Africa.

Digital insurance, including micro insurance continues to be a great opportunity in the fintech world and this product is able to offer insurance solutions to masses who can purchase it when they need it.

The game changer in the financial world is big data and the analysis of the best investment options and arbitrage opportunities will ensure that clients from anywhere in the world can participate in capital markets and their intermediaries 24/7, 365 days in a year. Our subsidiary EastGold will be using data to link our clients to the best financial and investment opportunities in the marketplace. For more information on the online platform you can contact us at info@eastgold.co.ke or contact us at +254714009065.

coming soon ...

EASTGOLD online academy

eastgold ONLINE ACADEMY

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EASTGOLD do you know regal diaspora services?

COMING SOON THE ULTIMATE FINANCIAL MARKET PLACE FOR YOUR INDIVIDUAL & BUSINESS NEEDS

EastGold is a subsidiary of the Regal Africa Group. East Gold’s mission is to use technology to Inform, Educate and Facilitate the uptake of the best financial and investments products and services in the marketplace.

EastGold Financial Services Top Plaza, 4th Floor Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 www.eastgold.co.ke info@eastgold.co.ke

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Regal Africa Financial Services Ltd. Top Plaza, 4th Floor, Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 www.regalafrica.co.ke info@regalafrica.co.ke

HOW AFRICANS’ CAN ERADICATE POVERTY SUSTAINABLY

By Anne Wambui Gaitha We at the Regal Africa Group believe that the only sustainable way to eradicate poverty on the Africa continent sustainably is through business. Trade not AID is the solution to a problem that has been with most African countries since they become independent. For African citizens to create wealth, they will need to create income by setting up an enterprise, establish a corporation or work for an organization where they are paid an income and they are able to put aside money to invest for the future. This boils down to how business is the best way people can make money and create wealth.

Unfortunately Africa as a continent continues to have more and more people establishing enterprises in the informal economy, which means that these businesses are not paying taxes to the Government to provide public services but most importantly, they are not able to grow as they lack the means to access affordable financing that will enable them to scale up operations and hire more people who are then able to use their skills and talents to grow the business and therefore the poverty cycle continues.

We at RAG believe that we need to focus on how we can provide more capital in the hands of business owners and teach them how to run a more efficient and effective enterprise that has the ability to grow and is sustainable beyond one generation. The answer we believe as mentioned before is formalizing the economy by encouraging more SMEs to register their companies and run them more professionally, this is a challenge as it is quite pricey to run a formal business in Africa and there are not enough incentives to encourage a business person to become formal.

We in Africa also need to support our own businesses and also ensure that we are able to have more corporates that expand beyond their nation borders which ensures that the SMEs in their supply/value chains are able to provide goods and services to a larger pool of clients, especially with the signing of the African Continental Free Trade Agreement (AFCFTA) this is a game changer for more mid and large corporates to access the continent as a whole. We do require more government policies and support especially on a regional and continental level to ensure that they are encouraging and supporting African businesses that are looking to grow within Africa as opposed to focusing on more Foreign Direct Investments from global companies that are from outside the continent.

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Continued from pg 18 As a private sector aspiring business leader, I have focused on encouraging more of our individual and business clients to save and invest more, especially the women and the youth to start by investing in unit trusts with a focus on Money Market Funds. Most people have asked me why I do this, as an investor is not able to get rich when investing in a money market fund but the reason we do this, is a more big picture outlook. We at the Regal Africa Group are more focused on Africa Economic Development and we know that this can only happen through business and with the assistance of government. We are saying for poverty to be eradicated in Africa, then Africans have to take charge of coming up with the solutions and only we can save ourselves.

In the case of investing in a Money Market Fund, we are encouraging everyone that with as little a $1/day they can start saving/investing. When the masses invest in the MMF the fund manager is able to collectively take the funds invested by their clients and they are required by the licensing authority to only invest in short term funds i.e. investments that mature in less than 12 months. This means that the fund manager usually places the funds in banks where they are able to negotiate a higher return than an individual, as they have a larger pool of funds that the banks wants, this pool of funds that are deposited by the fund manager on behalf of their clients is then lent to businesses who need the credit to operate and grow their businesses.

The fund managers also invest the funds in commercial papers which are short term debt instruments that are lent to more larger businesses that do not want to go to the banks for credit and have the ability to access the funds from mostly institutional/ HNI clients to operate and grow their businesses, again you can see that the money saved by the masses is able to collectively change how much credit is available to businesses.

Fund Managers also place funds in short term government treasury bills and bonds, this means that what one saves is able to be used by the government to provide public services without necessarily going to the global markets to access foreign debt, this means the government gets the funds they need and a local investor is able to get a good return on their investment.

Fund managers are also able to invest in other short term projects, structured notes that are liquid and this means that an investor gets a good return on investment, than they would get if they kept their money in the bank. I hope you are able to understand how $1 from millions of Africans can transform countries and the continent as a whole, if harnessed and managed well by reputable licensed fund managers. Again that is the work we are continuing to promote through our strategic partners.

The GrowPesa100 program looks to transform Kenya and the rest of Africa starting by using the 10M strong citizens of Kenya, this will translate to Ksh 30B invested monthly or Ksh 360B invested annually by a quarter of its citizens and these funds can then be put to use by businesses to grow the economy and create more jobs and transform the lives of all.

We at the Regal Africa Group believe that there is a solution for every problem and that business is the only sustainable solution to ensure eradication of poverty on the continent. If you would like to partner to ensure that this becomes a reality, you can contact us at growpesa@eastgold.co.ke or contact us at 0714009065.

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LETS HELP YOU PLAN FOR YOUR FUTURE

TM

GrowPesa100 is an innovative financial product by Regal Africa. This financial solution is great for the youth and people in the informal economy, who are able to put aside funds daily to start on their wealth journey.

By setting aside money as low as 100/day, we are able to assist our clients to get an investment account, a personal pension fund and enroll in an insurance plan.

Option 1 - Invest in a money market fund Option 2 - Invest in a money market fund + personal pension plan Option 3 - Invest in a money market fund + personal pension plan + Insurance (NHIF) Talk to one of our Wealth Advisors TODAY to start investing for your future

CONTACT US TODAY!!!

Regal Africa Group Top Plaza, 4th Floor Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 growpesa@eastgold.co.ke

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WELCOME TO THE BESPOKE REAL ESTATE SERVICE EXPERIENCE

Regal Africa Properties is part of the Regal Africa Group and is a company that offers Real Estate services in East Africa from its head office in Nairobi, Kenya.

We focus on finding great opportunities in the Real Estate industry and we have demonstrated experience in advising clients on real estate opportunities, which requires practical experience and an intimate knowledge of what works in East Africa

Top Plaza, 4th Floor Kindaruma Road, Nairobi,Kenya P.O. Box 40187 -00100, Nairobi, Kenya Phone: +254 0714 009 065 Email: properties@regalafrica.co.ke www.regalafrica.co.ke/properties

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CONTACT US TODAY! Invest in your Home Country Invest in your Family Invest in your Community Regal Africa Group is a diversified Financial Service Group that offers Financial Services, Advisory and Real Estate services to Individuals, Businesses and Institutions. We are based in Nairobi, Kenya to help our global clientele to achieve their financial goals.

We offer unrivalled financial solutions that focus on the Kenyan/Africa Diaspora with a goal to assist them to invest and get great returns. RegalDiaspora is our diaspora financial services product, that is offered to AtKenyans/Africans Regal africa we believe that Good Health is the most important thing a person can have . Good health goes a who reside outside the country. long way in helping an individual on their wealth creation journey #HealthyUWealthyU. Regal Africa would like your trusted partner our goalwhere is to beyou the can go toeasily firm for the diaspora the ground, ensure toAsintroduce youfinancial to an online platform generate quotesonfrom the topto20 insurance that our clients achieve their investment and financial goals. companies in Kenya.

Our services but not limited to:your loved ones and we will assist you in taking care of your financial Take care of include your health and that of Investments success . Talk to one of our wealth advisors today at insurance @regalafrica.co.ke or call 0714 009 065 for Banking and Insurance more assistance.

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Regal Africa Financial Services Ltd. Top Plaza, 4th Floor Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 www.regalafrica.co.ke info@regalafrica.co.ke

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WE ARE THE BEST IN CUSTOMIZING A WEALTH MANAGEMENT PLAN TAILORED FOR YOU

Regal Africa Wealth Management provides financial planning , wealth advice to individuals, families, family offices and businesses. We offer a high touch, high quality and customized service.

We believe that finding the right wealth adviser is critical to attaining your lifetime financial plan. Our aim is to help our clients to make the right financial decisions to attain their financial and investment goals as we assist them to plan, grow and manage their wealth.

Regal Africa Group Top Plaza, 4th Floor Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065

www.regalafrica.co.ke info@regalafrica.co.ke

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We would like to introduce to practicing lawyers �RegalLaw� the financial advisory service for lawyers. We will discuss about our Treasury Management service for funds entrusted to your law firm and our Corporate Wealth Planning services covering your business and personal financial plans.

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our accounting & audit services are unmatched

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Regal Africa Group is a diversified Financial Service Group that offers Financial Services, Advisory and Real Estate services to Individuals, Businesses and Institutions in East Africa to help them achieve their financial goals.

We offer unrivalled financial solutions to help our clients to achieve their financial goals. GlobalOffice our Accounting and Audit services include but not limited to: Accounting Outsourcing Asset and Inventory management Forensic Audit Internal and External audits Internal Control and Systems assessments Finance and Audit policy manuals Tax services Accounting Software installation and training Regal Africa Financial Services Ltd. Top Plaza, 4th Floor Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065

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Regal Africa Financial Services Ltd. Top Plaza, 4th Floor, Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 www.regalafrica.co.ke info@regalafrica.co.ke

EXPAND YOUR INVESTMENT PORTFOLIO Are you looking to invest Part of your income this year or do you have a lump-sum saved up to start investing ? Regal Africa would like to work with you to acheive your goals. We will facilitate the best investment vehicle that is specific to your needs, having factored in the investment amount, risk tolerance and time horizon.

We provide an array of investments options and each of them is concluded upon evaluation of the three mentioned factors. Investments are a means to help you secure a better future, so start investing wisely TODAY.

CONTACT US TODAY!!

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Tel: +254 0714 009 065 www.regalafrica.co.ke info@regalafrica.co.ke AGRIBUSINESS

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Regal Africa Group Regal Africa Group Top Plaza, 4th Floor 4th Floor TopRd, Plaza, Kindaruma Nairobi, Kenya Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 P.O. Box Nairobi Tel: 40187, +254 0714 00900100 065

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Disclaimer: The views expressed in this publication, are those of the writers where particulars are not warranted - as the facts may change from time to time .

The information and numbers stated and analyzed , are received from public information found in the daily newspapers. This publication is meant for general information only , and is not a warranty , representation or solicitation for any product that may be on offer. Readers are thereby advised in all circumstances , to seek the advice of an independent financial advisor or contact the Regal Africa team to advise them on the suitability of any financial product for their investment purposes.

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Regal Africa Group Top Plaza, 4th Floor Kindaruma Rd, Nairobi, Kenya P.O. Box 40187, Nairobi 00100 Tel: +254 0714 009 065 www.regalafrica.co.ke info@regalafrica.co.ke