Weekly Commentary – 13th May 2022

Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 8,372 million (4.98 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 gained against the Euro and the Sterling Pound. The observed overall depreciation against the Dollar is attributable to increased Dollar demand from energy and commodity importers.

	Week Before	Week After
Dollar	115.90	116.12
Euro	122.53	121.77
Sterling Pound	144.92	142.97

Liquidity

Liquidity in the money markets relatively eased, supported by government payments, which offset tax remittances. Open market operations remained active.

	Week Before	Week After
Interbank rate	4.76%	4.61%
Interbank volume (billion)	19.63	12.52
Commercial banks’ excess reserves (billion)	25.30	29.20

Fixed Income

T-Bills

T-Bills were over-subscribed during the week attributed to eased liquidity in the money markets. The acceptance rate decreased by 5.89% to close the week at 94.11%. The decline in acceptance rate reflect demand for higher rates by investors citing high inflation and loss of shilling value against the dollar.

T-Bill	Yield (% Rate)		Subscription Rate
	Week Before	Week After	Week Before	Week After
Overall			70.20%	102.28%
91 day	7.58%	7.68%	131.32%	131.97%
182 day	8.54%	8.72%	37.16%	79.26%
364 day	9.84%	9.86%	78.79%	113.41%

T-Bonds

The bonds market had a higher demand for the week’s bond offers. Bonds turnover rose by 181.1% to 16.15B up from 5.75B in the previous week.

In the primary market, the Central Bank released results for the auction of the 10yr and 15yr bonds. The bonds received bids worth 43.1B against the targeted 60B translating to a 71.9% undersubscription rate as investors sough higher rates citing high exposure to inflation and currency risks. The 10yr and 15yr bonds attracted average rates of 14.0% and 13.5% respectively. CBK accepted Kshs 31.7B.

Eurobonds

In the international market, yields on Kenya’s Eurobonds rose by an average of 109.9 basis points. The yields on the 10-year Eurobonds for Angola and Ghana also increased.

Equities

NASI, NSE 20 and NSE 25 decreased by 3.51%, 0.48% and 2.46% respectively. The market capitalization also decreased by 3.52% to 2.176 trillion. The performance was driven by losses recorded by large-cap stocks. Top losses were recorded in Equity, ABSA, Cooperative Bank and Safaricom which decreased by 3.50%, 2.41%, 1.38% and 5.62% respectively.

The Banking sector had shares worth Kshs 698M transacted which accounted for 28.17% of the week’s traded value. Manufacturing & Allied sector had shares worth 136M transacted which represented 5.50% and Safaricom, with shares worth Kshs 1.6M transacted represented 64.83% of the week’s traded value.

Top Losers	W-o-W
NBV	-15.86%
Kapchorua Tea	-8.86%
EA Cables	-6.36%
Flame Tree	-6.30%
Safaricom	-5.62%

Alternative Investments

	Week Before	Week After	% Change
Derivatives Turnover (million)	1.61	1.75	8.66%
Derivatives Contracts	16	8	-50.00%
I-REIT Turnover	0.081	0.176	117.98%
I-REIT Deals	17	26	52.94%

Global and Regional Markets

Global Markets	W-o-W
S&P 500	-2.41%
Dow Jones Industrial Average (DJI)	-2.14%
FTSE 100 (FTSE)	0.41%
STOXX Europe 600	0.78%
Shanghai Composite (SSEC)	2.76%
MSCI Emerging Markets	-6.05%
MSCI World Index	-3.86%

Continental Markets	W-o-W
FTSE ASEA Pan African Index	-6.48%
JSE All Share	1.14%
NSE All Share (NGSE)	4.25%
DSEI (Tanzania)	0.83%
ALSIUG (Uganda)	-2.03%

U.S stocks closed the week higher, as gains in the Technology, Oil & Gas and Consumer Services sectors led shares higher. However, the stocks were lower in most of the week. This follows as investors juggled fears of nagging inflation with signs it could be peaking.

European stocks closed the week high as investors continue to assess persistent inflation, aggressive monetary tightening, and the associated impact on global economic growth. Investors are continuing to monitor the geopolitical fallout from Russia’s invasion of Ukraine.

Asia Pacific stocks closed the week high as investors closely monitor impacts of the rising inflation which prompted tightening of monetary policies by central banks. China recorded an increase as Beijing recorded a smaller increase of COVID-19 cases, dwindling expectations of another lock-down in the city. Australia, Hong Kong’ and Japan also reported an increase.

On the global commodities markets, Crude Oil WTI closed the week lower by 0.41% and the ICE Brent Crude decreased by 0.88%. Gold futures prices decreased by 3.85% to settle at $1,1810.30.

Week’s Highlights