Weekly Commentary – 13th January 2023

Foreign Exchange Reserves

The usable foreign exchange reserves remained adequate at USD 7,415 million (4.15 months of import cover). This meets CBK’s statutory requirement to endeavor to maintain at least 4.0-months of import cover. However, it does not meet EAC region’s convergence criteria of 4.5-months of import cover.

Currency

The Kenyan Shilling depreciated against the Dollar, the Sterling Pound and the Euro to exchange at KES 123.84, KES 150.60 and KES 133.32 respectively. The observed depreciation against the Dollar is attributable to increased demand from energy and commodity importers.

	YTD Change	W-o-W Change
Dollar	0.33%	0.23%
Euro	1.26%	1.38%
Sterling Pound	1.26%	1.70%

Liquidity

Liquidity in the money markets increased with the average interbank rate dipping to 5.21% from 6.24%, as government payments offset tax remittances. Remittance inflows totaled $357.30 million in December 2022, a 3.43% increase from $345.45 million in November and 1.92% increase from $350.56 million in December 2021. Open market operations remained active.

	Week (previous)	Week (ending)
Interbank rate	6.24%	5.21%
Interbank volume (billion)	0.87	26.29
Commercial banks’ excess reserves (billion)	12.70	12.20

Fixed Income

T-Bills

T-Bills were over-subscribed during the week, with the overall subscription rate coming in at 108.88% from 131.65% recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 392.34% while the 182-day T-Bill and 364-day T-Bill had a subscription rate of 57.70% and 46.68% respectively. The acceptance rate picked up 0.58% to close the week at 99.94%.

T-Bonds

In the secondary bond market, there was a higher demand for the week’s bond offers. Bond turnover rose 507.80% from KES 1.94B in the previous week to KES 11.81B. Total bond deals increased by 146.77% from 186 in the previous week to 459.

In the primary bond market, CBK released auction results for FXD1/2020/005 and FXD1/2022/015 which sought KES 50.0 billion. The issues had a performance rate of 83.26%, receiving bids worth KES 41.63 billion, out of which KES 31.51 billion was accepted at an average rate of 12.88% and 14.19% respectively.

Eurobonds

In the international market, yields on Kenya’s Eurobonds declined by an average 0.30% compared to the previous week and 0.43% year to date. The yields on the 10-year Eurobond for Ghana increased while that of Angola declined. Below is a summary analysis of performance for individual bonds.

Bond	YTD Change	M-o-M Change	W-o-W Change
2014 10-Year Issue	-0.79%	-0.79%	-0.64%
2018 10-Year Issue	-0.36%	-0.36%	-0.27%
2018 30-Year Issue	-0.23%	-0.23%	-0.14%
2019 7-Year Issue	-0.50%	-0.50%	-0.22%
2019 12-Year Issue	-0.45%	-0.45%	-0.35%
2021 13-Year Issue	-0.26%	-0.26%	-0.18%

Equities

NASI, NSE 20 and NSE 25 settled 2.83%, 0.59% and 1.22% lower compared to the previous week bringing the year to date performance to -3.20%, 1.18% and -0.71% respectively. Market capitalization lost 2.84% from the previous week to close at KES 1.92 trillion recording a year to date decline of 3.21%. The performance was driven by losses recorded by large-cap stocks such as Safaricom, KCB and EABL of 6.38%, 1.28% and 0.72% respectively. These were however mitigated by gains recorded by Standard Chartered, Equity and ABSA of 3.32%, 2.20% and 1.66% respectively.

The Banking sector had shares worth KES 554M transacted which accounted for 47.74% of the week’s traded value, Manufacturing & Allied sector had shares worth KES 233M transacted which represented 20.14% and Safaricom, with shares worth KES 350M transacted represented 30.18% of the week’s traded value.

Top Losers	YTD Change	W-o-W
TP Serena	-7.69%	-13.67%
Bamburi	-7.63%	-7.63%
EA Portland	2.06%	-6.97%
Total	-6.08%	-6.67%
Safaricom	-8.52%	-6.38%

Alternative Investments

	Week (previous)	Week (ending)	% Change
Derivatives Turnover (million)	0.00	1.74	100.00%
Derivatives Contracts	0.00	29.00	100.00%
I-REIT Turnover	0.22	0.56	152.59%
I-REIT Deals	23.00	49.00	113.04%

Global and Regional Markets

Global Markets	YTD Change	W-o-W
S&P 500	4.57%	2.67%
Dow Jones Industrial Average (DJI)	3.53%	2.00%
FTSE 100 (FTSE)	3.84%	1.88%
STOXX Europe 600	4.23%	1.83%
Shanghai Composite (SSEC)	2.53%	1.19%
MSCI Emerging Markets	6.99%	4.16%
MSCI World Index	5.18%	3.24%

Continental Markets	YTD Change	W-o-W
FTSE ASEA Pan African Index	-1.89%	0.03%
JSE All Share	7.07%	3.37%
NSE All Share (NGSE)	1.78%	2.52%
DSEI (Tanzania)	0.26%	-0.49%
ALSIUG (Uganda)	0.65%	0.65%

US major indices posted strong weekly gains, with financial sector stocks giving S&P 500 the most support, as banks such as JPMorgan Chase & Co and Bank of America Corp beat their quarterly earnings estimates. Markets also reflected the University of Michigan’s survey findings that showed an improvement in consumer sentiment as the one-year inflation outlook for January fell.

European stocks ended the week higher, closing at a near nine-month high, supported by healthcare and banking stocks as well as Britain’s economic outlook which was boosted by a 0.1% growth in November.

Asia Pacific indices edged higher, with technology-heavy bourses in Taiwan, South Korea and Hong Kong recording the highest gains as treasury yields and the dollar retreated on soft inflation numbers. China markets rose on general optimism of economic rebound as the country reopens its borders.

On the global commodities markets, Crude Oil WTI and ICE Brent Crude closed the week 8.67% and 8.54% higher at $80.08 and $85.28 respectively. Gold futures prices settled 2.78% higher at $1,921.70.

Week’s Highlights