Weekly Commentary – 5th August 2022

Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 7,721 million (4.45 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 to exchange at Ksh 119.09, Ksh 121.31 and Ksh 144.51 respectively. The observed overall depreciation against the Dollar is attributable to increased Dollar demand from energy and commodity importers.

	YTD Change	W-o-W Change
Dollar	5.26%	0.24%
Euro	-5.29%	0.53%
Sterling Pound	-5.14%	1.02%

Liquidity

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

	Week (previous)	Week (ending)
Interbank rate	5.47%	5.25%
Interbank volume (billion)	23.8	20.9
Commercial banks’ excess reserves (billion)	27.2	27.4

Fixed Income

T-Bills

T-Bills were under-subscribed during the week with a decrease in the overall subscription rate from 82.11% recorded in the previous week to 48.27%. The 91-day T-Bill got the highest subscription rate at 186.9% while the 182-day T-Bill and 364-day T-Bill had a subscription rate of 20.6% and 20.5% respectively. The acceptance rate increased by 5.68% to close the week at 98.59%.

T-Bonds

The bonds market had a lower demand for the week’s bond offers. Bonds turnover decreased by 32.05% from 5.4B in the previous week to 3.67B. Total bond deals remained unchanged.

In the primary bond market, the Central Bank released results for the two re-opened fifteen year treasury bonds ; FXD2/2013/15 and FXD2/2018/15 each receiving bids worth 5.45B and 5.12B respectively.

Eurobonds

In the international market, the yields on the 10-year Eurobonds for Angola decreased and increased for Ghana. Yields on Kenya’s Eurobonds generally decreased by 78.2 basis points compared to the previous week, 0.335% and 8.173% month to date and year to date respectively. 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	10.92%	-1.61%	-1.59%
2018 10-Year Issue	8.98%	0.14%	-0.48%
2018 30-Year Issue	5.26%	-0.40%	-0.60%
2019 7-Year Issue	10.56%	0.02%	-0.79%
2019 12-Year Issue	7.27%	0.17%	-0.41%
2021 12-Year Issue	6.05%	-0.34%	-0.83%

Equities

NASI, NSE 20 and NSE 25 increased by 3.98%, 2.99% and 4.68% compared to last week bringing the year to date performance to -15.01%, -9.80% and -12.17% respectively. The market capitalization increased by 0.68% from the previous week to close at 2.213 trillion recording a year to date decline of -14.97%. The performance was driven by gains recorded by large-cap stocks. Top gains were recorded in East Africa Breweries, KCB ,Equity Group and Co-operative Bank which increased by 8.19%, 6.88%, 6.67% and 5.78% respectively.

The Banking sector had shares worth Ksh 567M transacted which accounted for 35.03% of the week’s traded value, Manufacturing & Allied sector had shares worth Ksh 221M transacted which represented 13.68% and Safaricom, with shares worth Kshs 711M transacted represented 43.91% of the week’s traded value.

Top Losers	YTD Change	W-o-W
Sameer Africa	24.56%	-10.58%
TPS Eastern Africa	0.33%	-10.00%
B.O.C Kenya	4.64%	-8.44%
Kapchorua Tea	0.75%	-7.18%
Nairobi Business Ventures	-40.49%	-4.79%

Alternative Investments

	Week (previous)	Week (ending)	% Change
Derivatives Turnover (million)	0.35	0.41	16.96%
Derivatives Contracts	12	13	8.33%
I-REIT Turnover	0.43	0.028	-93.52%
I-REIT Deals	9	3	-66.67%

Global and Regional Markets

Global Markets	YTD Change	W-o-W
S&P 500	-13.58%	0.36%
Dow Jones Industrial Average (DJI)	-10.34%	-0.14%
FTSE 100 (FTSE)	-0.87%	0.22%
STOXX Europe 600	-11.08%	-0.59%
Shanghai Composite (SSEC)	-11.16%	-0.81%
MSCI Emerging Markets	-18.70%	0.91%
MSCI World Index	-15.10%	0.21%

Continental Markets	YTD Change	W-o-W
FTSE ASEA Pan African Index	-20.67%	0.75%
JSE All Share	-5.84%	1.02%
NSE All Share (NGSE)	17.89%	0.70%
DSEI (Tanzania)	0.69%	0.31%
ALSIUG (Uganda)	-7.75%	4.30%

U.S stocks closed the week mixed as they recovered some of their early losses after a much stronger than expected July jobs report showed that U.S employers hired far more workers than expected in July raising alarms that the Federal Reserve would continue hiking the interest rates. The central bank policy makers are set to meet later during the month at an annual conference then have their policy meeting in September where they will have a chance to look more into the economic data including inflation.

European stocks closed the week lower after a stronger than expected U.S jobs reported up bets of another 75 basis points rate hike by the Federal Reserve next month with fears of a darkening growth outlook pushing shares towards weekly losses. The Pan-European STOXX 600 lost 0.6%, snapping two weeks positive on worries over harsh economic data from the region, rising geopolitical tensions and fears that the higher interest rates could tip the economy into a recession.

Asia Pacific stocks closed the week higher after recovering some of their losses earlier on in the week. Chinese stocks rose slightly with the Shanghai Shenzhen CSI 300 adding 0.3%. Taiwan, China, Asian and Hong Kong were mostly up at the end of the week with Philippine ending the week low.

On the global commodities markets, Crude Oil WTI closed the week lower by 9.81% and the ICE Brent Crude decreased by 8.37%. Gold futures prices increased by 0.01% to settle at $1,791.20.

Week’s Highlights