Weekly Commentary – 16th April 2021

Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 7,656 million (4.71 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 appreciated against the Dollar, the Euro and the Sterling Pound. The strengthening of the shilling is attributable to subdued dollar demand from importers and strong forex inflows.

	Week Before	Week After
Dollar	107.97	107.06
Euro	128.35	128.15
Sterling Pound	148.47	147.68

Liquidity

Liquidity in the money markets tightened after the CBK took custody of the Kshs 81.94 billion raised from investors in the infrastructure bond sale and banks remitted quarterly tax collections to the exchequer.

This was evidenced by banks trading cautiously in the interbank market in order to meet their cash reserve requirements (CRR). Open market operations remained active.

	Week Before	Week After
Interbank rate	4.67%	4.87%
Interbank volume (billion)	7.83	14.10
Commercial banks’ excess reserves (billion)	14.1	14.1

Fixed Income

T-Bills

The Treasury Bills remained under-subscribed. The under-subscription in T-Bills is attributable to tightened liquidity in the money markets.

T-Bill	Yield (% Rate)		Subscription Rate
	Week Before	Week After	Week Before	Week After
Overall			84.78%	86.91%
91 day	7.10%	7.11%	79.03%	102.40%
182 day	7.91%	7.94%	25.59%	36.65%
364 day	9.37%	9.40%	146.27%	130.98%

T-Bonds

The bonds market had high demand for the months bond offers. Bonds turnover increased to Ksh 26.73 billion from Ksh 3.62 billion the previous week.

In the international market, yields on Kenya’s Eurobonds declined by an average of 14.8 basis points. The yields for Angola’s 10-year Eurobond also declined while that of Ghana increased marginally.

Equities

NASI, NSE 20 and NSE 25 increased by 4.09%, 0.76% and 3.35% respectively. The performance was driven by gains recorded by large-cap stocks. Top gains were recorded in NCBA Group, Safaricom Plc and KCB Group which increased by 7.2%, 5.8% and 5.0% respectively.

The Banking sector had shares worth Kshs 558M transacted which accounted for 23.81% of the week’s traded value. Manufacturing & Allied sector represented 21.39% and Safaricom with shares worth Kshs 1.2B transacted, represented 51.23%.

Top Losers	W-o-W
Car & General	-10.00%
East Africa Portland	-8.70%
Sanlam	-5.22%
Crown Paints	-5.00%
Standard Group	-4.53%

Alternative Investments

	Week Before	Week After	% Change
Derivatives Turnover (million)	3.51	4.26	21.44%
Derivatives Contracts	89	76	52.63%
I-REIT Turnover (million)	0.72	1.27	75.60%
I-REIT Total Deals	72	59	-18.06%

Global and Regional Markets

Global Markets	W-o-W
S&P 500	1.37%
Dow Jones Industrial Average (DJI)	1.18%
FTSE 100 (FTSE)	1.50%
STOXX Europe 600	1.20%
Shanghai Composite (SSEC)	-0.70%
MSCI Emerging Markets Index	1.38%
MSCI World Index	1.49%

Continental Markets	W-o-W
FTSE ASEA Pan African Index	0.22%
JSE All Share	2.34%
NSE All Share (NGSE)	-0.15%
DSEI (Tanzania)	1.43%
ALSIUG (Uganda)	3.52%

European stock markets closed the week higher, aided by strong earnings from German auto giant Daimler which gained by 2.1% as well as rising sentiment over a global economic recovery. Stock markets around the globe have climbed to record levels during the week on expectations that the global vaccination program coupled with hefty stimulus packages will unleash pent-up demand.

Major indices in the US stock market ended the week high as gains in the Basic Materials, Telecommunications, and Healthcare sectors led the shares higher. Dow Jones increased by 1.18% while S&P 500 increased by 1.37% on the back of strong earnings from blue-chip companies and robust economic data that signaled a solid recovery from the pandemic.

On the global commodities markets, Crude Oil WTI closed the week high by 6.42% and the ICE Brent Crude increased by 6.07%. Gold futures prices increased marginally by 2.05% to settle at $1,779.00.

Week’s Highlights

• The Energy and Petroleum Regulatory Authority (EPRA) has retained diesel, petrol, and kerosene prices in the period between 15th April and 14th May, despite an increase in landing costs of fuel. This provides much-needed relief to fuel consumers and households.

• The Transport and Real Estate sectors have topped in loan defaults of over Kshs 100 billion and new bad loans of up to Kshs 67 billion in the nine months to December 2020, amid layoffs, travel restrictions, and business closures in the wake of the pandemic, according to data by the CBK.

• Kenya has been ranked as the most attractive investment destination for Japanese firms looking to invest in Africa, citing the country’s start-up community, geothermal power potential, expanding infrastructure, and big motor vehicle assembly industry, according to a survey by the Japan External Trade Organization (JETRO). South Africa came second, followed by Nigeria, Ethiopia, Ghana, Mozambique and Tanzania.

• The Insurance Regulatory Authority is proposing a reduction in time that insurers take to settle claims to up to 30 days from the day of lodging a claim, from the statutory period of ninety days, in a bid to protect consumers, boost consumer confidence and reduce the negative perception of the insurance industry.

• Africanhair PLC, a subsidiary of ClickBeauty International based in Denmark, seeks to raise new equity by listing at the NSE. The majority of the Company’s shareholders recently approved a directive to commence the listing process.

• The International Monetary Fund (IMF), in its latest global outlook, expects the world economy to grow at 6% in 2021 and 4% in 2022, from a negative 3% growth in 2020. The optimistic projections are due to upgrades for advanced economies, more so the USA, which is expected to grow at 6.4% in 2021 and China at 8.4% since the economy has rebounded to pre-pandemic GDP levels.

• The Organization of the Petroleum Exporting Countries (OPEC) revealed that it expects the global oil demand to jump by 6 million barrels per day (bpd) in 2021, revising its previous projection upward by approximately 100,000 barrel per day.