Foreign Exchange Reserves
The CBK’s usable foreign exchange reserves remained adequate at USD 8,773 million (5.36 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 depreciated against the Dollar, but appreciated against the Euro and the Pound. The weakening of the shilling is attributable to increased dollar demand from energy and merchandise importers.
| Week Before | Week After | |
|---|---|---|
| Dollar | 112.18 | 112.39 |
| Euro | 127.15 | 126.15 |
| Sterling Pound | 151.29 | 149.97 |
Liquidity
Liquidity in the money markets tightened, supported by tax remittances which partly offset government payments. Open market operations remained active.
| Week Before | Week After | |
|---|---|---|
| Interbank rate | 5.20% | 5.24% |
| Interbank volume (billion) | 10.97 | 9.71 |
| Commercial banks’ excess reserves (billion) | 18.60 | 16.20 |
Fixed Income
T-Bills
The T-Bills became under-subscribed. The under-subscription is attributable to tightened liquidity in the money market. The 91-day T-bill recorded the highest subscription rate, attributable to high risk-adjusted return offered by the paper.
| T-Bill | Yield (% Rate) | Subscription Rate | ||
|---|---|---|---|---|
| Week Before | Week After | Week Before | Week After | |
| Overall | 108.64% | 64.55% | ||
| 91 day | 7.07% | 7.11% | 209.94% | 98.42% |
| 182 day | 7.68% | 7.75% | 84.76% | 25.20% |
| 364 day | 8.75% | 8.84% | 92.00% | 90.35% |
T-Bonds
The bonds market had high demand for the week’s bond offers. Bonds turnover increased to Kshs 18.41 billion from Kshs 10.60 billion recorded in the previous week.
In the primary bond market, the government reopened two bonds, FXD4/2019/10 and FXD1/2018/20, with fixed coupon rates of 12.3% and 13.2% respectively and effective tenors of 8.0 years, and 16.4 years, respectively, in a bid to raise Kshs 40.0 billion for budgetary support.
In the international market, the yields on Kenya’s Eurobonds increased by an average of 25.5 basis points. The yields on the 10-year Eurobonds for both Ghana and Angola also increased.
Equities
NASI, NSE 20 and NSE 25 declined by 2.17%, 0.39% and 1.72% respectively. Market capitalization also decreased by 2.35% to 2.57 trillion. The performance was driven by losses recorded by large-cap stocks. Top losses were recorded in Kenya Commercial Bank Plc, Safaricom Plc and East African Breweries Limited which declined by 4.5%, 3.2% and 1.9% respectively.
The Banking sector had shares worth Kshs 1.47B transacted which accounted for 24.71% of the week’s traded value, Manufacturing & Allied sector represented 3.17%, and Safaricom with shares worth Kshs 4.2B transacted, contributed 71.08%.
Top Gainers and Losers in the Equities Markets
| Top Gainers | W-o-W |
|---|---|
| Nairobi Business Ventures | 49.08% |
| Kakuzi Plc | 10.00% |
| East African Portland | 5.56% |
| Kenya Power | 4.68% |
| Absa Bank Plc | 4.29% |
| Top Losers | W-o-W |
|---|---|
| Liberty Holdings | -8.85% |
| Sameer | -7.02% |
| Nation Media Group | -5.75% |
| Kenya Commercial Bank | -4.47% |
| Kengen | -4.35% |
Alternative Investments
| Week Before | Week After | % Change | |
|---|---|---|---|
| Derivatives Turnover (million) | 3.92 | 4.46 | 13.64% |
| Derivatives Contracts | 34 | 20 | -41.18% |
| I-REIT Turnover | 0.22 | 0.28 | 32.20% |
| I-REIT Deals | 32 | 42 | 31.25% |
Global and Regional Markets
| Global Markets | W-o-W |
|---|---|
| S&P 500 | -2.20% |
| Dow Jones Industrial Average (DJI) | -1.95% |
| FTSE 100 (FTSE) | -2.49% |
| STOXX Europe 600 | -4.53% |
| Shanghai Composite (SSEC) | 0.10% |
| MSCI Emerging Markets | -3.63% |
| MSCI World Index | -2.73% |
| Continental Markets | W-o-W |
|---|---|
| FTSE ASEA Pan African Index | -4.57% |
| JSE All Share | -2.29% |
| NSE All Share (NGSE) | 0.25% |
| DSEI (Tanzania) | -0.63% |
| ALSIUG (Uganda) | -1.34% |
European stocks closed the week low, supported by Travel stocks which decreased by 13.6% as fears over a new corona virus variant sent investors scurrying to safe-haven assets. The market swings come against a backdrop of already growing concern about Covid-19 outbreaks driving restrictions on movement and activity in Europe and beyond.
U.S. stocks ended the week low as well as investors dashed for safe-haven assets following the new variant of Covid-19, which is vaccine-resistant. U.S. Treasury debt yields also posted their sharpest drop since the pandemic began.
Asia Pacific stocks closed the week low as investors continued to assess the risks to global economic recovery posed by the latest omicron Covid-19 strain.
On the regional front, South African markets closed the week low due to the Omicron variant of Covid-19 that has seen European countries impose travel ban on flights from South Africa.
On the global commodities markets, Crude Oil WTI closed the week low by 10.45% and the ICE Brent Crude decreased by 7.82%. Gold futures prices also decreased by 3.57% to settle at $1,785.50.
Week’s Highlights
- The Kenya Mortgage Refinancing Company (KMRC) is working with banks, Saccos and other financial institutions to develop mortgage-backed securities where the lenders will pool home loans of similar characteristics to sell to investors, who will then gain by earning monthly mortgage repayments from home buyers. These uniform lending standards are necessary for such loans to be packaged as asset backed securities that can then be sold on to third party investors.
- The Capital Markets Authority has barred listed firms with negative equity from rolling out share buybacks, locking out companies with solvency issues from the process largely applied to correct perceived undervaluation of stock. The rules also prohibit listed firms from repurchasing shares from the market within 14 days before disclosing annual or half-year financial performance or have become aware of material information which could affect share prices.
- The Nairobi Securities Exchange (NSE) has announced the de-listing of the National Bank of Kenya, following 100% take-over by the Kenya Commercial Bank through a share swap at the rate of ten NBK shares for one KCB share.
- The Institute of Certified Public Accountants (ICPAK), in collaboration with SYSPRO, a global enterprise resource planning software provider, released survey findings conducted among Chief Financial Officers (CFOs) in Kenya’s Manufacturing Sector. The survey, which assessed sentiments on the progress of manufacturing businesses after an economic slump in 2020, showed only 7% of the businesses surveyed as expressing an “already recovered” trading environment today while 36% of the companies surveyed projected stability as from 2023. This shows there is need for diversification and innovation in changing global market policies to help businesses adapt to the ‘new normal’ of the digitized world.
- Tanzania’s central bank intends to launch its central bank digital currency (CBDC) amid the global rise and the increasing adoption of cryptocurrencies. The Tanzania Central Bank is currently strengthening the knowledge and capacity of its officers on digital currencies as part of the preparations in anticipation for launch.
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