Foreign Exchange Reserves
The CBK’s usable foreign exchange reserves remained adequate at USD 8,533 million (5.18 months of import cover). This meets CBK’s statutory requirement to endeavor to maintain at least 4.0-months of import cover, and the EAC region’s convergence criteria of 4.5-months of import cover.
Currency
The Kenyan Shilling remained relatively stable against the Dollar and depreciated against the Euro to trade at Kshs 108.49 and Kshs 127.41 from Kshs 108.47 and Kshs 126.49 respectively. The Shilling depreciated against the Sterling Pound to trade at Kshs 140.25 an increase of 135 basis points. The stability in the dollar is attributable to uncertainty in the global economy and also the decline in dollar inflows as trade is impacted.
Liquidity
Money markets remained relatively liquid supported by Treasury’s efforts to raise new debt. The inter-bank rate increased to 3.53% from 3.26% recorded in the previous week. The inter-bank volume decreased to Kshs 10.22 billion from Kshs 10.35 billion. Commercial banks’ excess reserves stood at Kshs 13.50 billion which is a decrease from Kshs 14.10 billion.
Fixed Income
T-Bills
The T-Bills subscription rate increased to 64.92% up from 29.69% the preceding week and remained under-subscribed. The under-subscription in T-Bills is attributable to tightening liquidity conditions in the money markets. The 91-day paper was oversubscribed at 154.65% up from 28.04%, the subscription rate for the 182-day and 364-day papers stood at 40.59% and 53.34% respectively. The yields on the 91-day, 182-day and 364-day papers papers increased marginally to 6.40%, 6.84% and 7.74% from 6.31%, 6.77% and 7.69% respectively.
T-Bonds
The bonds market had high demand for the months bond offers. Bonds turnover increased with bonds turnover closing in at Kshs 2.71 billion from Kshs 2.49 billion registered in the previous session. Overall subscription rate for all three bonds offered was 178.13%. The three re-opened auctions were, FXD2/2010/15, FXD1/2020/15 and FXD1/2011/20 with fixed coupons of 10.5%, 12.5% & 11.9% and effective tenors of 5.3 years, 15.3 years and 11.3 years, respectively.
Equities
The Equity Market closed the week with 9.7 million shares traded with equity turnover of Kshs 236 million against Kshs 19.8 million shares traded with equity turnover of Kshs 501 million in the previous week. Market capitalization decreased slightly by 0.10% to Kshs 2.15 billion.
NASI decreased by 0.11% but NSE 20 increased by 0.25% and NSE 25 remained unchanged. The performance of the NASI was driven by declines recorded by large-cap stocks with the top losses being recorded in Equity Group, KCB Group and ABSA Bank which declined by 0.4%, 1.0% and 2.0% respectively.
The Banking sector had shares worth Kshs 388m transacted which accounted for 1.43% of the week’s traded value, Manufacturing & Allied sector represented 10.51% and Safaricom with shares worth Kshs 866 million transacted, contributed 56.83%.
Top Gainers and Losers in the Equities Markets
| Top Gainers | W-o-W |
|---|---|
| Jubilee | 32.61% |
| NBV | 10.00% |
| BK Group | 8.15% |
| CIC Insurance | 5.80% |
| Stanbic | 5.26% |
| Top Losers | W-o-W |
|---|---|
| Sameer | -14.11% |
| TP Serena | -9.91% |
| Sasini | -8.50% |
| Flame Tree | -7.86% |
| Crown Paint | -7.53% |
Alternative Investments
The derivatives market over the week recorded 5 contracts having a turnover of Kshs 0.5million.
I-REIT market over the week recorded a turnover of Kshs 2.16million with 74 deals which was a decrease from Kshs 2.86million recorded over the close of last week.
The ETF market over the week recorded a turnover of Kshs 196,000 with 1 deal.
Global and Regional Markets
| Global Markets | W-o-W |
|---|---|
| S&P 500 | 1.52% |
| Dow Jones Industrial Average (DJI) | 1.87% |
| FTSE 100 (FTSE) | 1.02% |
| STOXX Europe 600 | 2.02% |
| Shanghai Composite (SSEC) | -0.04% |
| MSCI Emerging Markets Index | 2.13% |
| MSCI World Index | 1.53% |
| Continental Markets | W-o-W |
|---|---|
| FTSE ASEA Pan African Index | 0.66% |
| JSE All Share | 2.84% |
| NSE All Share (NGSE) | 2.53% |
| DSEI (Tanzania) | -0.14% |
| ALSIUG (Uganda) | 1.79% |
Global stock markets gained over the week. The increase in the FTSE 100 & MSCI World Index indicating that investors have largely incorporated the tough economic environment in stock prices.
On the regional front, the FTSE ASEA Pan African Index, representing African stock exchanges, marginally increased as African business leaders predict a swift post COVID recovery.
On the global commodities markets, Crude Oil WTI Futures declined 7.95% to 37.05 and the ICE Brent Crude decreased by 6.32% to 39.27. Gold futures prices increased by 2.21% to settle at 1,907.60.
Week’s Highlights
- The Central Bank of Kenya (CBK) opted not to extend the six-month freeze for listing loan defaulters with credit reference bureaus (CRBs), paving the way for blacklisting of thousands of borrowers. But the defaulters look set to appear in the books of Kenya’s three CRBs — Metropol, TransUnion and Creditinfo International—from January after the expiry of the 90-day notice. The banking sector is struggling with mounting unpaid loans. Data from the CRBs shows that the accounts negatively listed has jumped from 2.7 million last year, most of them linked to mobile digital borrowers.
- Pension fund investments in alternative asset classes such as private equity (PE) rose by a fifth in the first half of this year to cross the Sh1 billion mark for the first time to stand at 1.17 billion, up from Sh969 million in December 2019 and Sh910 million in June 2019. This was in search of returns in a difficult environment caused by the Covid-19 outbreak.
- Kenya’s foreign exchange reserves dropped by Sh22.6 billion last week due to external payments by CBK on behalf of the government. The regulator has continued to make periodic external payments on behalf of the government, on those loans that they have. The reserves serve as a buffer against exchange rate volatility.
- US stocks managed to recover by the close of the week as investors parsed the news that the US president and the first lady tested positive for corona virus. This was aided by renewed talk of coronavirus stimulus aid in Congress which could help extend gains for equity markets and help to stimulate the economy.
- Banks have restructured loans worth Sh1.12 trillion or 38% of the total loan book by end of August due to the corona virus-induced economic hardships that have hurt the borrowers’ ability to repay. Data by the Kenya National Bureau of Statistics (KNBS) shows the number of people in employment fell to 15.87 million between April and end of June compared to 17.59 million the previous quarter.
- National Oil Corporation of Kenya (Nock) which is low in cash, owes KCB Sh3.8 billion and Stanbic Bank Sh1.5 billion in loan principal and interest. KCB demanded full settlement of the loan in 30 days, failing which the bank would institute recovery measures.
- Africa CEO Forum introduced a survey of 150 CEO providing insights on the climate, situation, and outlook of the African private sector. Across all sectors, survey respondents exhibited a high degree of confidence about Africa’s long-term outlook with 60% confident that business will return to normal in 2021. The leaders cited the emergency measures implemented during the crisis to have long-term positive benefits.
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