Foreign Exchange Reserves

The usable foreign exchange reserves stood at USD 6,743 million (3.61 months of import cover). This falls short of CBK’s statutory requirement to endeavour to maintain at least 4.0 months of import cover as well as the EAC region’s convergence criteria of 4.5 months of import cover.

Currency

The Kenyan Shilling depreciated against the Dollar to exchange at KES 153.34, but appreciated against the Sterling Pound and the Euro to exchange at KES 192.76 and KES 165.28 respectively. The observed depreciation against the Dollar is attributed to a high demand from energy and commodity importers.

CurrencyYTD ChangeW-o-W Change
Dollar24.24%0.07%
Sterling Pound29.60%-0.53%
Euro25.53%-1.30%

Liquidity

Liquidity in the money markets increased, with the average inter-bank rate decreasing from 10.57% to 10.40%, as government payments more than offset tax remittances. Open market operations remained active.

LiquidityWeek (previous)Week (ending)
Interbank rate10.57%10.40%
Interbank volume (billion)9.6710.23
Commercial banks’ excess reserves (billion)23.1025.00

Fixed Income

T-Bills

T-Bills remained over-subscribed during the week, with the overall subscription rate increasing to 156.90%, up from 100.26% performance recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 786.08% while the 182-day T-Bill and 364-day T-Bill had a subscription rate of 54.12% and 8.00% respectively. The acceptance rate decreased by 0.65% to close the week at 94.27%.

T-Bonds

In the secondary bond market, there was a higher demand for the week’s bond offers. Bond turnover increased by 28.24% from KES 10.10 billion in the previous week to KES 12.95 billion. Total bond deals increased by 1.36% from 588 in the previous week to 596.

In the primary bond market, CBK released auction results for the re-opened 6.5-year infrastructure bond IFB1/2023/6.5, which sought to raise KES 25 billion. The issue received bids worth KES 47.24 billion, representing a subscription rate of 188.96%.

Eurobonds

In the international market, yields on Kenya’s Eurobonds decreased by an average of 0.20% compared to the previous week, a 0.20% month-to-date loss and a 0.57% year-to-date gain. The yields on the 10-year Eurobonds for Angola and Zambia increased. Below is a summary analysis of performance for individual bonds.

BondYTD ChangeM-o-M ChangeW-o-W Change
2014 10-Year Issue1.46%-0.02%-0.02%
2018 10-Year Issue0.51%-0.32%-0.32%
2018 30-Year Issue0.15%-0.17%-0.17%
2019 7-Year Issue0.59%-0.30%-0.30%
2019 12-Year Issue0.22%-0.19%-0.19%
2021 13-Year Issue0.51%-0.22%-0.22%
Equities

NASI, NSE 20, NSE 25 and NSE 10 settled 1.81%, 1.25%, 1.06% and 0.57% higher compared to the previous week, bringing the year-to-date performance to -26.23%, -9.68%, -22.81% and -6.58% respectively. Market capitalization also gained 1.81% from the previous week to close at KES 1.47 trillion, recording a year-to-date decline of -26.03%. The performance was driven by gains recorded by large-cap stocks such as Stanbic, ABSA and Safaricom of 6.13%, 5.02% and 3.56%. These were however weighed down by losses recorded by large-cap stocks such as NCBA and Co-operative of 2.56% and 2.63% respectively.

The Banking sector had shares worth KES 183.9M transacted which accounted for 13.58% of the week’s traded value, Manufacturing and Allied sector had shares worth KES 41.2M transacted which represented 3.04% and Safaricom, with shares worth KES 73.8M transacted represented 79.64% of the week’s traded value.

Top Gainers and Losers in the Equities Markets

Top GainersYTD ChangeW-o-W
Bamburi31.48%17.97%
Eaagads32.86%9.84%
BK Group20.00%9.09%
FAHARI I-REIT-6.49%8.56%
EA Cables12.94%6.67%
LosersYTD ChangeW-o-W
Eveready55.56%-14.50%
Home Africa-20.59%-10.00%
Standard Group-24.98%-9.89%
Olympia-5.41%-9.68%
HF Group13.97%-8.88%

Alternative Investments

LosersWeek (previous)Week (ending)% Change
Derivatives Turnover (million)0.330.83156.50%
Derivatives Contracts10.0010.000.00%
I-REIT Turnover (million)0.060.1060.70%
I-REIT deals19.0011.00-42.11%

Global and Regional Markets

Global MarketsYTD ChangeW-o-W
S&P 50020.40%0.21%
Dow Jones Industrial Average (DJI)9.40%0.01%
FTSE 100 (FTSE)0.01%0.33%
STOXX Europe 6008.77%1.30%
Shanghai Composite (SSEC)-4.72%-2.05%
MSCI Emerging Markets Index1.29%-0.73%
MSCI World Index17.16%0.21%
Continental MarketsYTD ChangeW-o-W
FTSE ASEA Pan African Index3.61%0.31%
JSE All Share-1.01%-3.06%
NSE All Share (NGSE)38.66%0.17%
DSEI (Tanzania)-7.85%0.18%
ALSIUG (Uganda)-26.68%-0.64%

The US stock market closed out the week in the green zone, fueled by a better-than-expected U.S. jobs report that showed low unemployment and strong job creation. This boosted investor confidence in achieving a soft economic landing.

The European stock market closed the week on an upward trajectory, fueled by investor bets on a potential pause in the European Central Bank’s (ECB) interest rate hikes and an encouraging U.S. jobs report that ignited risk appetite among investors.

Asian stock markets ended the week in the red, as investors grappled with both persistent concerns over a Chinese economic slowdown and the potential shift away from negative interest rates in Japan, as hinted by Bank of Japan Governor Kazuo Ueda.

On the global commodities markets, Crude Oil WTI and ICE Brent Crude closed the week 3.79% and 3.85% lower at $71.26 and $75.84 respectively. Gold futures prices settled 3.51% lower at $1,998.30.

Week’s Highlights

  • The Monetary Policy Committee (MPC) of the Central Bank of Kenya raised the Central Bank Rate (CBR) from 10.50% to 12.50% during its meeting on December 5, 2023. This decision comes amidst persistent domestic inflationary pressures and a depreciating shilling, which are driving a rising cost of living and eroding purchasing power for households. The MPC also emphasized its ongoing commitment to monitoring the impact of its policies and the evolving global and domestic economic environment. It stands ready to take further steps to tighten monetary policy as circumstances warrant.
  • The government has tabled the Affordable Housing Bill, which seeks to align the Housing Levy with the Constitution. This legislation clarifies the collection authority, expands applicability to a broader income bracket, including those without pay slips, establishes a dedicated fund for managing the levy and clearly defines eligibility criteria for accessing affordable housing options. It also significantly increases penalties for non-compliance, with employers facing a 3% monthly penalty on unpaid contributions. Additionally, the bill strengthens measures against misappropriation of funds, with offenders facing a whopping KES 10 million penalty or a 5-year jail term (or both). The projected revenue over the next three years is estimated to reach KES 211.2 billion.
  • The Capital Market Authority (CMA) of Kenya granted a non-dealing foreign exchange broker license to FP Markets, a leading global online contract-for-difference (CFD) and forex broker. This significant development marks FP Markets’ entry into the African market, providing investors and traders with access to a comprehensive range of financial instruments and services.
  • The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) decreased to 45.8 in November, marking the third consecutive month of decline for the private sector and signalling a deepening economic contraction. Primarily driven by significant falls in output, new orders and employment. New orders and customer spending declined due to rising prices and cash flow constraints. Input costs soared to the second-highest level ever recorded, fueled by a weakening currency, higher taxes and escalating fuel charges. Companies raised output prices to maintain margins, resulting in a near-record increase. Employment witnessed one of the steepest declines on record, reflecting reduced output.
  • China’s trade surplus unexpectedly expanded in November 2023, reaching USD 68.39 billion. This surpassed market expectations of USD 58 billion and marked an increase from USD 66.49 billion in November 2022. The positive result was driven by stronger-than-anticipated export growth and a surprising decline in imports.
  • The S&P Global US Composite PMI held steady at 50.7 in November 2023, confirming the previous month’s high and indicating a marginal upturn in business activity. While output grew in both the manufacturing and services sectors, the pace of expansion was modest. New business returned to growth, ending a three-month decline, driven by rising export orders. Employment levels remained stagnant, reaching their lowest point since June 2020. Input cost inflation slowed to its lowest rate in over three years. Output price inflation accelerated due to rising service sector selling prices.
  • The HCOB Eurozone Composite Purchasing Managers’ Index (PMI) was revised upwards to 47.1 in November 2023, marking the highest reading since July. This is an improvement from the preliminary estimate of 47.1 and slightly above October’s 35-month low of 46.5. New business activity declined for the sixth consecutive month but at the slowest rate in four months. Export sales continued to decline for the twenty-first consecutive month. Employment decreased for the first time in nearly three years. Additionally, input costs rose sharply, matching the fastest pace since May and output charge inflation also saw a slight increase.

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