Monthly Market Commentary – April 2023

ECONOMIC INDICATORS

Foreign Exchange Reserves

During the month, the usable foreign reserves increased by 1.28% to settle at USD 6.51 billion (3.62 months of import cover). This lies below CBK’s statutory requirement to endeavour to maintain at least 4 months of import cover as well as EAC region’s convergence criteria of 4.5 months of import cover.

Currency

The Kenyan Shilling depreciated against the USD by 2.70%, exchanging at Kshs 135.91 at the end of the month, up from Kshs 132.33 in the previous month. The Shilling also depreciated against the Sterling Pound by 3.48% and the Euro by 3.71%, exchanging at Kshs 169.37 and Kshs 149.72 at the end of the month, up from Kshs 163.67 and Kshs 144.37 respectively in the previous month. The depreciation is due to increased Dollar demand by importers as well as investors hedging their exposure by holding foreign currency deposits.

USD Vs KSHS

STERLING POUND & EURO Vs KSHS

Inflation

The overall year-on-year inflation declined significantly to 7.91% in April from a revised figure of 9.19% in March. This is mainly attributed to lower food prices as the long rainy season prevails in the country.

INFLATION EVOLUTION

Liquidity

During the month, liquidity tightened as a result of tax remittances which more than offset government payments. The interbank rate rose to 9.37% from 7.86%. The volume of inter-bank transactions decreased to Kshs 12.87 billion from Kshs 21.35 billion. Commercial banks excess reserves increased from Kshs 8.90 billion to Kshs 22.10 billion.

INTER-BANK RATE and VOLUME

FIXED INCOME

T-Bills

T-bills recorded an overall subscription rate of 110.33% during the month of April, compared to 97.99% recorded in the previous month. The rise in subscriptions was driven by investors flocking to T-bills, particularly the 91-day paper whose preference and dominance remained evident, as they sought to take advantage of their attractive yields. The performance of the 91-day, 182-day and 364-day papers stood at 558.01%, 15.18% and 26.41% respectively. On a monthly basis, yields on the 91-day, 182-day and 364-day papers increased by 3.71%, 1.08% and 3.00% to 10.28%, 10.51% and 11.12% respectively as investors aggressively bid to compensate for a weaker Shilling and inflationary pressures.

T-BILLS

T-Bonds

During the month, T-Bonds registered a total turnover of Kshs 38.69 billion from 1,727 bond deals. This represents a monthly decrease of 48.39% and 54.62% respectively. The yields on government securities in the secondary market increased during the month of April.

In the primary market, CBK reopened the 17-year amortized infrastructure bond; IFB1/2023/017 through a tap sale seeking to raise 10.0 billion. Additionally, Central Bank issued a new 3-year fixed coupon treasury bond; FXD1/2023/003 targeting 20.0 billion with a market-determined coupon rate.

In the international market, yields on Kenya’s Eurobonds increased by an average of 241 basis points.

YIELD CURVE

EQUITIES

During the month, market capitalization lost 4.56% to settle at Kshs 1.68 trillion. Total shares traded declined by 67.15% to 198.06 million shares while equity turnover dropped 87.17% to close at Kshs 4.21 billion. On a monthly basis, NASI, NSE 20 and NSE 25 settled 4.55%, 2.66% and 3.74% lower. The performance was a result of losses recorded by large-cap stocks such as Standard Chartered, Safaricom and KCB of 12.35%, 8.84% and 7.46%. These were however bolstered by gains recorded by other large-cap stocks such as Co-operative and Equity of 1.14% and 0.66% respectively.

NSE 20 and NSE 25

ALTERNATIVE INVESTMENTS

• The derivatives market, over the month, recorded 22 contracts with a turnover of Kshs 1.30 million which was a decrease from 90 contracts with a turnover of Kshs 11.36 million recorded in the previous month.

• I-REIT market, over the month, recorded a turnover of Kshs 3.47 million with 220 deals which was a decrease from Kshs 7.15 million with 247 deals recorded in the previous month.

• The ETF market, over the month, recorded a turnover of Kshs 1.52 million with 2 deals which was an increase from no activity recorded in the previous month.

GLOBAL AND REGIONAL MARKETS

Global Markets	Weekly Change	Monthly Change
S&P 500	1.46%	9.03%
STOXX Europe 600	1.92%	7.48%
Shanghai Composite(SSEC)	1.54%	6.63%
MSCI Emerging Market Index	-1.34%	1.50%
MSCI World	1.59%	9.04%

Regional Markets	Weekly Change	Monthly Change
FTSE ASEA Pan African Index	1.18%	-0.36%
JSE All Share	2.96%	6.18%
NSE All Share (NGSE)	-4.47%	1.57%
DSEI (Tanzania)	0.15%	-1.17%
ALSIUG (Uganda)	-2.77%	-8.13%

• During the month, global markets generally recorded a positive performance. In the US, the S&P 500 and Dow Jones indices edged 1.46% and 2.48% higher respectively from the previous month. In Europe, the continental index of STOXX Europe 600 and the UK’s FTSE 100 were up by 1.92% and 3.13%, after strong earnings from tech-related companies helped investors look past signs of economic weakness in the US.

• On a regional front, markets posted mixed performance. The FTSE ASEA Pan African index, representing the overall African markets gained 1.18% from March. South Africa’s JSE All Share and Tanzania’s DSEI gained 2.96% and 0.15% while Nigeria’s All Share Index and Uganda’s All Share Index lost 4.47% and 2.77% respectively.

• On the global commodities markets, oil future indices remained volatile, owing to an unexpected decline in Chinese manufacturing activity, which raised concerns about deteriorating economic conditions. Additionally, potential interest rate hikes by major central banks which could affect energy demand contributed to this volatility. Crude Oil WTI futures settled 1.47% higher while ICE Brent Crude Oil settled 0.29% lower to close at $76.78 and $79.54 respectively.