Foreign Exchange Reserves
The usable foreign exchange reserves stood at USD 7,180 million (3.80 months of import cover). This falls short of CBK’s statutory requirement to endeavor to maintain at least 4.0-months of import cover as well as EAC region’s convergence criteria of 4.5-months of import cover.
Currency
The Kenyan Shilling appreciated against the Dollar, the Sterling Pound and the Euro to exchange at KES 131.25, KES 163.76 and KES 141.12 respectively. The observed appreciation against the Dollar is attributed to the increased foreign inflows.
| Currency | YTD Change | W-o-W Change |
|---|---|---|
| Dollar | -16.39% | -1.38% |
| Sterling Pound | -18.06% | -1.56% |
| Euro | -18.73% | -0.84% |
Liquidity
Liquidity in the money markets increased, with the average inter-bank rate decreasing from 13.86% to 13.75%, as government payments more than offset tax remittances. Remittance inflows totalled $397.30 million in April 2024, a 2.57% decrease from $407.80 million in March 2024 and a 24.04% rise from $320.30 million in April 2023. Open market operations remained active.
| Liquidity | Week (Previous) | Week (Ending) |
|---|---|---|
| Inter-bank rate | 13.86% | 13.75% |
| Inter-bank volume (billion) | 27.17 | 15.64 |
| Commercial banks’ excess reserves (billion) | 15.9 | 11.8 |
Fixed Income
T-Bills
T-Bills remained over-subscribed during the week, with the overall subscription rate increasing to 223.57%, up from 108.20% recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 431.34%, while the 182-day T-Bill and 364-day T-Bill had subscription rates of 229.64% and 134.39% respectively. The acceptance rate decreased by 7.19% to close the week at 92.33%.
T-Bonds
In the secondary bond market, there was a lower demand for the week’s bond offers. Bond turnover decreased by 13.03%, from KES 28.19 billion in the previous week to KES 24.52 billion. Total bond deals decreased by 25.29% from 613 in the previous week to 458. In the primary bond market, CBK re-opened a 10-year bond FXD1/2024/10 through a tap sale, targeting to raise KES 15.0 billion. The issue received bids worth Kshs 7.11 billion, representing a subscription rate of 47.38%. Of these, KES 7.03 billion worth of bids were accepted at a weighted average rate of 16.23%.
In the international market, yields on Kenya’s Eurobonds decreased by an average of 0.35% compared to the previous week, 0.47% month-to-date and 0.76% year-to-date. The yields on the 10-year Eurobonds for Angola declined while that of Zambia increased. Below is a summary
analysis of performance for individual bonds.
Eurobonds
In the international market, yields on Kenya’s Eurobonds increased by an average of 0.13% compared to the previous week, 0.58% month-to-date and decreased by 0.44% year-to-date. The yields on the 10-year Eurobonds for Angola and 12-Year Eurobond for Zambia increased. Below is a summary analysis of performance for individual bonds.
| Bond | YTD Change | MTD Change | W-o-W Change |
|---|---|---|---|
| 2018 10-Year Issue | -1.20% | -0.52% | -0.40% |
| 2018 30-Year Issue | -0.24% | -0.32% | -0.44% |
| 2019 7-Year Issue | -1.56% | -0.54% | -0.34% |
| 2019 12-Year Issue | -0.51% | -0.49% | -0.39% |
| 2021 13-Year Issue | -0.10% | -0.45% | -0.36% |
| 2024 6-Year Issue | -0.74% | -0.51% | -0.36% |
Top Gainers and Losers in the Equities Markets
| Top Gainers | YTD Change | W-o-W |
|---|---|---|
| HF Group | 26.96% | 17.11% |
| NBV | -3.25% | 13.33% |
| Uchumi | 5.56% | 11.76% |
| BOC Kenya | 8.23% | 9.91% |
| Home Africa | 12.82% | 9.68% |
| Top Losers | YTD Change | W-o-W |
|---|---|---|
| Standard Group | 26.36% | -9.52% |
| Britam | 3.50% | -8.59% |
| TP Serena | -7.69% | 7.41% |
| Transcentury | 7.69% | -6.67% |
| Car General | -6.00% | -6.19% |
Alternative Investments
| Week (previous) | Week (ending)% | % change | |
|---|---|---|---|
| Derivatives Turnover (million) | 3.47 | 1.43 | -58.71% |
| Derivatives Contracts | 23.00 | 10.00 | -56.52% |
| I-REIT Turnover (million) | 0.00 | 0.00 | 0.00% |
| I-REIT deals | 0.00 | 0.00 | 0.00% |
Global and Regional Markets
| Global Markets | YTD Change | W-o-W |
|---|---|---|
| S&P 500 | 10.12% | 1.85% |
| Dow Jones Industrial Average (DJI) | 4.77% | 2.16% |
| FTSE 100 (FTSE) | 9.22% | 2.68% |
| STOXX Europe 600 | 8.83% | 3.01% |
| Shanghai Composite (SSEC) | 6.53% | 0.48% |
| MSCI Emerging Markets Index | 4.58% | 0.96% |
| MSCI World Index | 7.91% | 1.74% |
| Continental Markets | YTD Change | W-o-W |
|---|---|---|
| FTSE ASEA Pan African Index | 230.17%- | -4.27% |
| JSE All Share | 4.10% | 2.68% |
| NSE All Share (NGSE) | 29.27% | -1.36% |
| DSEI(Tanzania) | 1.16% | 0.00% |
| ALSIUG (Uganda) | 17.24% | -1.54% |
The US stock market posted gains during the week, as investors digested positive jobless claims data that rekindled hopes for interest rate cuts by the Federal Reserve. The European stock markets closed the week on an upward trajectory, buoyed by strong corporate earnings. Investor focus now shifts to Germany’s April inflation data, seen as crucial for the ECB’s upcoming interest rate decisions. Asian stock markets closed the week on a positive note, fueled by gains in the tech and consumer sectors. Additionally, investor sentiment was boosted by positive consumer prices data from China.
Week’s Highlights
The Treasury announced the Finance Bill 2024 and the following were the key tax
proposals:
- VAT: Removes exemptions for financial services and some goods and services; expands VAT to include betting, gaming and the lottery.
- Excise Duty: Increases rates for betting, gaming, the lottery from 12.5% to 20% and some telecommunication services from 20% to 15%.
- Tax Deductions: Allows deductions for social security and housing contributions.
- Reduced Export and Investment Promotion Levy from max 17.5% to 3.0%.
- Export Incentives: Reduces a levy on exports and expands to specific new goods, such as vodka and certain milk products.
- Digital Taxation: Introduces a withholding tax on digital content monetization of 5% for residents and 20% for non-residents.
- Family Trust Taxation: Income from registered family trusts will be taxable.
- The New Motor Vehicle Tax: introduces a new 2.5% tax on the value of a car (minimum KES 5,000, maximum KES 100,000). Exemptions apply to specific vehicles, like ambulances and government vehicles.
- The Stanbic Bank Kenya PMI increased to 50.1 in April 2024 from 49.7 in March, signaling a stabilization in operating conditions. While new orders and output levels remained steady, employment, purchases and inventories all grew, suggesting a rise in existing workloads and positive business expectations. Additionally, average input costs fell for the first time in nearly four years, driven by declines in the wholesale and retail sectors. The 12-month outlook for production continues to exhibit a robust recovery from February’s survey record low, with optimism reaching a 13-month high. This upswing is primarily driven by growth expectations in the services sector.
- The Capital Markets Authority (CMA) introduced regulations for Alternative Investment Funds (AIFs), targeting institutional and high net-worth investors with a minimum initial investment of KES 1 million. AIFs pool investments from 2 to 100 individuals in various structures: debt, equity, hedge funds, property and infrastructure. These regulations aim to ensure AIFs meet strict governance standards while protecting investors through minimum investment thresholds and transparency requirements. AIFs offer diversification benefits, potentially mitigating risks during economic downturns.
- The Nairobi Securities Exchange (NSE) has listed the KES 3 billion Linzi Sukuk on its
Unquoted Securities Platform (USP). This Shariah-compliant Islamic security, structured as a
residential lease-based security, has a 15-year maturity and offers an internal rate of return
(IRR) of 11.13%. The proceeds from the Sukuk will be used to finance the construction of
affordable institutional housing, directly supporting the government’s affordable housing
agenda. - The Bank of England (BoE) kept its interest rate at 5.25%, the highest level since 2008, but signaled a potential shift in policy. Despite meeting market expectations, two policymakers voted for a rate cut, hinting at a dovish turn. This aligns with the BoE’s revised economic outlook, which forecasts inflation returning to its 2% target and growth picking up in Q1 The BoE even projects further rate cuts by year-end, reaching 3.75%. While inflation risks persist particularly due to geopolitical factors, the central bank emphasizes its data- driven approach, suggesting a potential easing cycle on the horizon.
- China’s trade surplus narrowed to $72.4 billion in April 2024 from $86.5 billion in April 2023, falling short of expectations of $76.7 billion. This decline is primarily due to the 8.4% surge in imports compared to the modest growth in exports of 1.5%. However, the trade gap with the US widened to $27.2 billion in April. Looking at the year-to-date figures, China maintains a surplus of $255.7 billion, with exports edging up slightly and imports showing a moderate increase.
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