Foreign Exchange Reserves
The usable foreign exchange reserves stood at USD 6,872 million (3.69 months of import cover). This falls short of CBK’s statutory requirement to endeavour to maintain at least 4.0 months of import cover as well as the EAC region’s convergence criteria of 4.5 months of import cover.
Currency
The Kenyan Shilling depreciated against the Dollar, the Euro and the Sterling Pound to exchange at KES 149.13, KES 158.06 and KES 183.17 respectively. The observed depreciation against the Dollar is attributed to a high demand for the currency, which has caused a market shortage.
| Currency | YTD Change | W-o-W Change |
|---|---|---|
| Dollar | 20.83% | 0.30% |
| Sterling Pound | 23.16% | 1.50% |
| Euro | 20.06% | 1.08% |
Liquidity
Liquidity in the money markets tightened, with the average interbank rate increasing from 11.98% to 12.31%, as tax remittances more than offset government payments. Open market operations remained active.
| Liquidity | Week (previous) | Week (ending) |
|---|---|---|
| Interbank rate | 11.98% | 12.31% |
| Interbank volume (billion) | 32.64 | 28.33 |
| Commercial banks’ excess reserves (billion) | 21.50 | 17.50 |
Fixed Income
T-Bills
T-Bills remained over-subscribed during the week, with the overall subscription rate recorded as 180.15%, up from 138.11% performance recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 937.42% while the 182-day T-Bill and 364-day T-Bill had a subscription rate of 27.77% and 29.63% respectively. The acceptance rate increased by 15.25% to close the week at 94.69%.
T-Bonds
In the secondary bond market, there was a lower demand for the week’s bond offers. Bond turnover decreased by 58.12% from KES 8.97 billion in the previous week to KES 3.76 billion. Total bond deals decreased by 11.14% from 404 in the previous week to 359.
In the primary bond market, CBK released auction results for the reopened FXD1/2023/002 and FXD1/2023/005 which sought to raise KES 35.0 billion. The issues received bids worth KES 12.30 billion, representing a subscription rate of 35.14%. Of these, KES 6.31 billion worth of bids were accepted at a weighted average rate of 17.74% and 17.99% respectively.
Eurobonds
In the international market, yields on Kenya’s Eurobonds decreased by an average 1.70% compared to the previous week. They however recorded a 1.48% month-to-date gain and a 2.42% year-to-date gain. The yields on the 10-year Eurobonds for Zambia and Angola also declined. Below is a summary analysis of performance for individual bonds.
| Bond | YTD Change | M-o-M Change | W-o-W Change |
|---|---|---|---|
| 2014 10-Year Issue | 2.02% | 1.11% | -4.35% |
| 2018 10-Year Issue | 3.06% | 1.82% | -0.75% |
| 2018 30-Year Issue | 1.62% | 1.10% | -0.53% |
| 2019 7-Year Issue | 3.22% | 2.09% | -1.31% |
| 2019 12-Year Issue | 2.04% | 1.35% | -2.73% |
| 2021 13-Year Issue | 2.57% | 1.43% | -0.57% |
Equities
NASI and NSE 20 settled 0.13% and 0.04% lower while NSE 25 and NSE 10 settled 0.08% and 0.03% higher, compared to the previous week, bringing the year-to-date performance to -26.68%, -10.94%, -21.80% and -5.07% respectively. Market capitalization lost 0.13% from the previous week to close at KES 1.46 trillion, recording a year-to-date decline of 26.47%. The performance was driven by losses recorded by large-cap stocks such as NCBA, Safaricom and Equity of 0.38%, 0.36% and 0.27% respectively. These were however boosted by gains recorded by large-cap stocks such as Standard Chartered and EABL of 2.03% and 1.61% respectively.
The Banking sector had shares worth KES 271M transacted which accounted for 57.80% of the week’s traded value, Manufacturing & Allied sector had shares worth KES 49.4M transacted which represented 10.54% and Safaricom, with shares worth KES 122.3M transacted represented 26.08% of the week’s traded value.
Top Gainers and Losers in the Equities Markets
| Top Gainers | YTD Change | W-o-W |
|---|---|---|
| Liberty | -20.63% | 11.11% |
| Uchumi | 4.76% | 10.00% |
| Standard Group | -24.78% | 9.78% |
| Home Africa | 0.00% | 9.68% |
| TP Serena | -3.85% | 7.76% |
| Losers | YTD Change | W-o-W |
|---|---|---|
| Olympia | -2.03% | -14.20% |
| Unga | -53.13% | -11.76% |
| Sameer | 12.26% | -8.46% |
| Crown Paint | -17.59% | -6.30% |
| BOC Kenya | 13.07% | -5.88% |
Alternative Investments
| Losers | Week (previous) | Week (ending) | % Change |
|---|---|---|---|
| Derivatives Turnover (million) | 1.37 | 0.29 | -78.72% |
| Derivatives Contracts | 42.00 | 14.00 | -66.67% |
| I-REIT Turnover (million) | 0.16 | 0.00 | -100% |
| I-REIT deals | 31 | 00 | -100% |
Global and Regional Markets
| Global Markets | YTD Change | W-o-W |
|---|---|---|
| S&P 500 | 13.17% | 0.45% |
| Dow Jones Industrial Average (DJI) | 1.62% | 0.79% |
| FTSE 100 (FTSE) | 0.60% | 1.40% |
| STOXX Europe 600 | 3.45% | 0.96% |
| Shanghai Composite (SSEC) | -0.91% | -0.28% |
| MSCI Emerging Markets Index | -1.17% | 1.49% |
| MSCI World Index | 10.04% | 0.59% |
| Continental Markets | YTD Change | W-o-W |
|---|---|---|
| FTSE ASEA Pan African Index | -3.02% | -0.07% |
| JSE All Share | -1.77% | 1.86% |
| NSE All Share (NGSE) | 30.24% | 1.12% |
| DSEI (Tanzania) | -5.65% | 0.84% |
| ALSIUG (Uganda) | -24.45% | -1.14% |
The US stock market closed the week green, as investors weighed positive corporate earnings from major banks, against persistent concerns over inflation and the development of the geopolital tension between Israel and Palestine.
European stock market closed the week on an upward trajectory due to stronger-than-expected US consumer inflation, coupled with the Federal Reserve’s decision to maintain higher borrowing costs for an extended period. As a result, riskier assets like travel and leisure stocks were sold off, while oil and gas stocks increased.
Asian stocks closed the week in the red zone, as investors assessed data showing that the China’s consumer inflation surprisingly remained unchanged in September while producer inflation declined at its slowest pace in six months.
On the global commodities markets, Crude Oil WTI and ICE Brent Crude closed the week 13.75% and 10.71% higher at $87.69 and $90.89 respectively. Gold futures prices settled 5.17% higher at $1941.50.
Week’s Highlights
- The Energy and Petroleum Regulatory Authority (EPRA) released its latest monthly statement on the maximum retail prices of petroleum products, effective from 15th October 2023 to 14th November 2023. The pump price of Super Petrol has increased by KES 5.72 to KES 217.36 per litre, Diesel by KES 4.48 to KES 205.47 per litre and Kerosene by KES 2.45 to KES 205.06 per litre. The price of cooking gas has also been on the rise, as inflation woes loom.
- The president signed the Public Finance Management (amendment) bill into law, which sets the borrowing threshold at 55% of the Kenyan GDP, as opposed to the current numerical debt ceiling. The law includes principal, interest payments and all financial obligations as part of the public debt which aligns with the provisions of the constitution.
- The government approved the Privatization Bill, 2023, which aims to accelerate the privatization of non-performing state-owned enterprises (SOEs). The new law replaces the Privatization Act 2005, enacted before the current constitution. Privatization will be accomplished through an initial public offering of shares, the sale of shares through a public tender, the sale of shares as a result of the exercise of pre-emptive rights, or through any other mechanism that will be determined by the Cabinet. The new move is expected to encourage more participation of the private sector in the economy, leading to improved efficiency and enhanced capital market development.
- The Stanbic Bank Kenya PMI fell to 47.8 in September 2023, from 50.6 in August, amid rising costs and falling consumer demand. New orders and output fell sharply, while jobs and inventories were cut for the first time in seven months. Input inflation accelerated to the second-highest on record, leading firms to raise prices. Despite the difficult economic conditions, businesses remained optimistic, with their optimism levels remaining relatively stable from August’s five-month high.
- The government authorized the Liquefied Petroleum Gas (LPG) Growth Policy, which aims to transition Kenyan households from traditional and less efficient cooking fuels such as biomass and kerosene to modern and environmentally friendly LPG. All new housing developments will be required to have provisions for LPG reticulation infrastructure as a prerequisite for approval. These measures intend to lower consumer prices, enhance public safety, and significantly improve both public health and environmental sustainability.
- The International Monetary Fund (IMF) lowered its global growth forecast for 2024 to 2.9% from 3% in July, while keeping its 2023 projections unchanged at 3%. Additionally, it increased its projections for worldwide inflation to 6.9% for 2023 and 5.8% for 2024, up from 6.8% and 5.2%, respectively. The US growth rate is expected to expand by 2.1% in 2023 and 1.5% in 2024. This year’s growth rates for Japan and the UK are expected to be higher by 0.5% and 2%, respectively. However, the Chinese economy is expected to expand at a slower rate of 5% in 2023 and 4.2% in 2024. Growth in the Euro Area is also projected to decrease to 0.7% in 2023 and 1.2% in 2024. The IMF notes that the balance of risks remains heavily skewed to the downside, as many countries’ fiscal buffers have been depleted.
- US inflation held steady at 3.7% in September, contrary to market expectations of a slight drop. Prices for energy and other goods and services continued to rise, but at a slower pace than in previous months. Energy costs fell by 0.5% in September, after falling by 3.6% in August. Primarily due to a rebound in fuel prices. Prices for food, new vehicles, apparel, medical care commodities, shelter and transportation services also increased at a slower pace in September than in August. The core CPI, which excludes volatile food and energy prices, slowed to 4.1% in September, its lowest level since September 2021. On a monthly basis, consumer prices rose by 0.4% in September, which was slightly higher than expected.
- The British economy grew slightly by 0.2% in August 2023, meeting market expectations, following a revised contraction of 0.6% in July. The services sector was the main driver of growth, with strong contributions from professional, scientific and technical activities, and education. However, consumer-facing services fell sharply by 0.6%, due to contractions in the sports and recreation industry by 10.8% and other personal service activities by 4.3%. Production output, manufacturing and construction decreased by 0.7%, 0.8% and 0.5%, respectively. Overall, GDP increased by 0.3% in the three months to August, with expansions in all sectors.
- China’s inflation rate held steady in September 2023, unchanged from a year earlier and falling short of market expectations by 0.2%. The latest data showed that deflationary pressures are persisting in the world’s second-largest economy, raising concerns about the sustainability of the recovery amid weak demand. Food prices fell by 3.2% in September, down from a 1.7% decline in August. Non-food inflation accelerated to 0.7% from 0.5% in August, driven by price increases in clothing, housing, health and education. The annual core inflation rate, which excludes food and energy prices, remained unchanged at 0.8% in September.
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