Weekly Commentary – 14th April 2022

Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 8,284 million (4.92 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. However, it 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	115.29	115.44
Euro	125.76	125.16
Sterling Pound	150.78	150.16

Liquidity

Liquidity in the money markets eased, partly reflecting government payments which offset tax remittances. Open market operations remained active.

	Week Before	Week After
Interbank rate	4.77%	4.47%
Interbank volume (billion)	31.31	14.48
Commercial banks’ excess reserves (billion)	14.60	15.30

Fixed Income

T-Bills

T-Bills remained under-subscribed during the week with a decrease in subscription rate compared to the previous week. The acceptance rate decreased by 0.42% to close the week at 99.2%.

T-Bill	Yield (% Rate)		Subscription Rate
	Week Before	Week After	Week Before	Week After
Overall			60.37%	48.17%
91 day	7.38%	7.42%	59.57%	119.98%
182 day	8.22%	8.32%	39.31%	26.01%
364 day	9.74%	9.75%	81.22%	42.52%

T-Bonds

The bonds market had a lower demand for the week’s bond offers. Bonds turnover fell by 42.86% to 15.22B down from 26.63B in the previous week.

In the international market, yields on Kenya’s Eurobonds rose by an average of 20.7 basis points. The yields on the 10-year Eurobonds for Angola increased while that for Ghana decreased.

Equities

NASI, NSE 20 and NSE 25 increased by 0.60%, 1.16% and 0.65% respectively. However the market capitalization decreased by 1.29% to 2.467 trillion. The performance was driven by gains recorded by large-cap stocks. Top gains were recorded in BK Group Plc, Safaricom and ABSA which increased by 1.52%, 1.45% and 1.24% respectively.

The Banking sector had shares worth Kshs 272M transacted which accounted for 20.4% of the week’s traded value, Manufacturing & Allied sector had shares worth 51M transacted which represented 3.82% and Safaricom, with shares worth Kshs 961M transacted represented 71.78% of the week’s traded value.

Top Losers	W-o-W
NBV	-21.84%
Car General	-14.29%
EA Cables	-10.09%
Kapchorua Tea	-9.52%
Olympia	-9.33%

Alternative Investments

	Week Before	Week After	% Change
Derivatives Turnover (million)	2.08	1.50	-27.79%
Derivatives Contracts	14	27	92.86%
I-REIT Turnover	0.85	0.29	-65.76%
I-REIT Deals	55	37	-32.73%

Global and Regional Markets

Global Markets	W-o-W
S&P 500	-2.13%
Dow Jones Industrial Average (DJI)	-0.78%
FTSE 100 (FTSE)	-0.69%
STOXX Europe 600	-0.25%
Shanghai Composite (SSEC)	-1.25%
MSCI Emerging Markets	-1.33%
MSCI World Index	-1.73%

Continental Markets	W-o-W
FTSE ASEA Pan African Index	4.22%
JSE All Share	-1.87%
NSE All Share (NGSE)	1.99%
DSEI (Tanzania)	-0.47%
ALSIUG (Uganda)	-0.42%

U.S stocks closed the week low, as loss in Technology, Consumer services and Consumer goods sectors led shares lower. Investors expressed concern over the potential for aggressive U.S. policy tightening as other central banks around the world moved to reduce support. Rising 10-year Treasury yields pressured growth stocks, dragging the S&P 500 and the Nasdaq deeply into negative territory, while the Dow posted a more modest loss.

European stocks closed the week low as investors shifted focus on the key policy-setting meeting from the European Central Bank which aims to decide the path of monetary policy against a backdrop of record-high inflation and concerns on war related recession.

Asia Pacific stocks closed the week high as China hinted that it would loosen monetary policy further. The Peoples’ Bank of China was expected to cut the one-year policy loans interest rates and possibly lower the reserve requirement ratio. Japan, Australia and Hong Kong’ also reported an increase while South Korea inched down.

On the global commodities markets, Crude Oil WTI closed the week higher by 9.43% and the ICE Brent Crude increased by 8.68%. Gold futures prices increased by 1.72% to settle at $1,974.90.

Week’s Highlights

• The Energy and Petroleum Regulatory Authority (EPRA) announced a Ksh. 9.90 price increase per liter on petroleum products during its monthly review. A liter of petrol will retail at Ksh 144.62 up from Ksh 134.72, diesel will cost Ksh 125.5 from Ksh 115.6 while Kerosine will retail at Ksh 113.55 per liter. The Kenyan Market has experienced fuel shortage in the recent weeks as Oil Marketing Companies (OMCs) continue holding back the product in protest for delayed settlement of subsidy dues.

• The average interest charged on loans by Kenya’s commercial banks has risen to its highest level in two years amid increased demand for credit as the economy recovers from Covid-19 disruptions. Several lenders have sought approval from the CBK to switch to risk-based loan pricing, setting the stage for expensive credit for small traders and workers in the informal sector.

• Ghana inflation rate in March climbed to 19.4%, due to surge in the price of foodstuff, fuel and fertilizer. The country recorded the highest inflation in 13 years as authorities cite supply disruptions due to the Russia Ukraine crisis for the rise in these basket items.

• Kenyan Market is expected to experience more shortages as China declares lock-down in one of its major logistics hubs; Shanghai. This implies that goods from Yiwu cannot reach the port for further shipping to Kenya.

• The Kenya Association of Manufacturers (KAM) noted that limited access to the dollar has negatively impacted its ability to settle obligations to overseas suppliers in a timely manner. KAM has attributed surging prices on key commodities to the shortage and urged the government to waive taxation on fuel to keep the skyrocketing prices in check.