Foreign Exchange Reserves
The CBK’s usable foreign exchange reserves remained adequate at USD 9,228 million (5.64 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, the Euro and the Sterling Pound. The weakening of the shilling is attributable to increased dollar demand from energy and merchandise importers.
| Week Before | Week After | |
|---|---|---|
| Dollar | 110.87 | 111.06 |
| Euro | 128.63 | 129.32 |
| Sterling Pound | 151.89 | 153.32 |
Liquidity
Money markets remained relatively liquid, supported by government payments which partly offset tax remittances and Treasury Bills’ redemptions worth Kshs6.5 billion.
Remittance inflows increased to USD 309.8 million in September compared to USD 260.7 million in September 2021. Open market operations remained active.
| Week Before | Week After | |
|---|---|---|
| Interbank rate | 4.62% | 4.63% |
| Interbank volume (billion) | 12.44 | 11.63 |
| Commercial banks’ excess reserves (billion) | 10.00 | 13.30 |
Fixed Income
T-Bills
The T-Bills subscription rate remained under-subscribed. There was preference on the 91-day paper, attributable to better risk-adjusted return.
| T-Bill | Yield (% Rate) | Subscription Rate | ||
|---|---|---|---|---|
| Week Before | Week After | Week Before | Week After | |
| Overall | 74.33% | 74.23% | ||
| 91 day | 6.95% | 7.02% | 75.39% | 163.01% |
| 182 day | 7.43% | 7.42% | 90.07% | 65.33% |
| 364 day | 8.23% | 8.36% | 58.15% | 74.23% |
T-Bonds
The bonds market had high demand for the week’s bond offers. Bonds turnover increased to Kshs 15.0 billion from Kshs 10.3 billion recorded in the previous week.
In the international market, yields on Kenya’s Eurobonds recorded a mixed performance. The 10-year bond issued in 2018 increasing by 0.3% points to 6.0%. Similarly, the yields on the 10-year bond issued in 2014, the 7-year bond and 12-year bond issued in 2019 increased by 0.1% points to 3.6%, 5.5% and 6.8% respectively, while the yields on the 30-year bond issued in 2018 and the 12-year bond issued in 2021 remained unchanged at 7.9% and 6.6%, respectively. The yield on the 10-year Eurobond for Ghana also increased, while that of Angola declined.
Equities
NASI, NSE 20 and NSE 25 decreased by 0.18%, 0.49% and 0.05% respectively. Market capitalization also decreased by 0.18% to 2.78 trillion. The performance was driven by losses recorded by large-cap stocks. Top losses were recorded in NCBA, Diamond Trust Bank Kenya and KCB Group which declined by 2.9%, 2.1% and 2.0% respectively.
The Banking sector had shares worth Kshs 870M transacted which accounted for 27.10% of the week’s traded value, Manufacturing & Allied sector represented 28.93%, and Safaricom with shares worth Kshs 1Bn transacted, contributed 31.91%.
Top Gainers and Losers in the Equities Markets
| Top Gainers | W-o-W |
|---|---|
| Sasini | 10.24% |
| Fahari I-REIT | 6.73% |
| CFC Stanbic Bank | 4.65% |
| Kengen | 3.28% |
| Crown Paints | 3.00% |
| Top Losers | W-o-W |
|---|---|
| Eveready | -17.43% |
| Nairobi Business Ventures | -14.81% |
| Express Kenya | -11.82% |
| Standard Group Limited | -4.39% |
| WPP Scangroup | -6.52% |
Alternative Investments
| Week Before | Week After | % Change | |
|---|---|---|---|
| Derivatives Turnover (million) | 2.51 | 1.47 | -41.43% |
| Derivatives Contracts | 40 | 41 | 2.50% |
Global and Regional Markets
| Global Markets | W-o-W |
|---|---|
| S&P 500 | 1.64% |
| Dow Jones Industrial Average (DJI) | 1.08% |
| FTSE 100 (FTSE) | - 0.41% |
| STOXX Europe 600 | 0.53% |
| Shanghai Composite (SSEC) | 0.29% |
| MSCI Emerging Markets | 0.74% |
| MSCI World Index | 1.34% |
| Continental Markets | W-o-W |
|---|---|
| FTSE ASEA Pan African Index | 3.05% |
| JSE All Share | 0.05% |
| NSE All Share (NGSE) | 0.78% |
| DSEI (Tanzania) | -0.03% |
| ALSIUG (Uganda) | 0.32% |
European stocks closed the week higher, boosted by an easing of worries surrounding embattled property group China Evergrande as well as positive corporate earnings, notably French cosmetics giant L’Oreal.
U.S. stocks ended the week higher due to gains in the Financials, Oil & Gas and Consumer Goods sectors, as investors digested the news that China’s Evergrande Group appeared to avert default with a source saying it made a last-minute bond coupon payment worth $83.5 million.
Asia Pacific stocks closed the week higher as well. Japan’s Nikkei was high after released data showed that the national core consumer price index increased by 0.1% year-on-year and the manufacturing purchasing managers index was 53 in October. The payment of China Evergrande also saw the Chinese Composite edge higher towards the end of the week.
On the global commodities markets, Crude Oil WTI closed the week high by 1.80% and the ICE Brent Crude increased by 0.79%. Gold futures prices increased by 1.58% to settle at $1,796.30.
Week’s Highlights
- Retail investors at the NSE have used 52.45% of their shares as securities for bank loans. Borrowing against shares helps individuals to access funds without selling their stocks at a loss or before reaping maximum returns through capital gains and dividends. This comes amid a rebound in the stock market, led by a rally in Safaricom, which dominates the bourse. The jump in paper wealth has given investors an opportunity to take profits besides a bigger headroom to borrow against their rising portfolio.
- Kenya’s trade deficit for the first eight months of the year widened by 35.31% to Kshs 852.14 billion from Kshs 629.75 a year ago on increased expenditure on imports. Recovery in global oil prices and persistent disruptions in supply chains have increased the cost of shipping materials. A persistently higher trade deficit slows down the creation of new job opportunities and piles pressure on the shilling as the demand for dollars remains elevated.
- Fresh outbreak of Covid-19 in China has reduced activity at the country’s biggest airports including cancellation of flights, raising fears of disruptions in supply chain among Kenyan traders. This has forced many traders to source goods from alternative markets that are more expensive. The Kenya Association of Manufacturers is monitoring the situation and may urge its members to turn to other markets for raw material if the situation persisted.
- The Central Bank of Kenya reported a net surplus of Kshs 36.9 billion in the last financial year compared to a net surplus of Kshs 41.5 billion in the 2019/2020 financial year. The operating surplus declined to Kshs 11.7 billion from Kshs 17.1 billion as a result of the one-off gain of Kshs 7.4 billion on the demonetization of old currency that was realized in the prior year and lower rates offered on foreign deposit placements following the adverse impacts of the pandemic. The economic outlook however, still remains positive.
- Equity turnover at the NSE in the third quarter of the year declined by 17.45% to Kshs 31.36 billion and the volume of shares traded also also declined by 13.93% to 946.48 million in the third quarter. However, market capitalization increased by 2.83% to Kshs 2.78 trillion, while NSE 20 and NASI increased by 5.38% and 2.75% to settle at 2,031.27 points and 178.31 points respectively at the end of the quarter.
- 82% of Chief Executive Officers of most firms in East Africa are confident that the economies of their countries are rebounding, compared to 32% at the peak of the pandemic, according to the KPMG East Africa CEO Outlook Survey. This optimism is despite continued uncertainty and risks such as risk posed by Emerging and or Disruptive Technology, Supply Chain Risk and Cyber Security Risk in the region.
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