Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 9,261 million (5.66 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 importers.

 Week BeforeWeek After
Dollar110.72110.87
Euro127.90128.63
Sterling Pound150.46151.89

Liquidity

Money markets remained eased, supported by government payments as well as Term Auction Deposits (TADs) maturities worth Kshs 28.2 billion which partly offset tax remittances.

Remittance inflows increased in relation to the 4.25 percent cash reserves requirement (CRR). Open market operations remained active.

 Week BeforeWeek After
Interbank rate6.35%4.62%
Interbank volume (billion)10.9812.44
Commercial banks’ excess reserves (billion)11.8010.00

Fixed Income

T-Bills

The T-Bills subscription rate remained under-subscribed. There was preference on the 182-day paper, attributable to higher returns on a risk-adjusted basis offered by the paper.

T-BillYield (% Rate)Subscription Rate
Week BeforeWeek AfterWeek BeforeWeek After
Overall40.93%74.33%
91 day 6.94%6.95%85.56%75.39%
182 day7.32%7.43%39.62%90.07%
364 day8.03%8.23%24.39%58.15%
T-Bonds

The bonds market had low demand for the week’s bond offers. Bonds turnover decreased to Kshs 10.34 billion from Kshs 12.57 billion recorded in the previous week.

In the international market, yields on Kenya’s Eurobonds recorded a mixed performance. Yields on the 10-year bond issued in 2014 and the 10-year bond issued in 2018 increasing by 0.1% points to 3.5% and 5.8% respectively, while the 30-year bond issued in 2018 increased by 0.2% points to 8.0%, from 7.8% recorded the previous week. The 7-year bond issued in 2019, 12-year bond issued in 2019 and the 12-year bond issued in 2021 remained unchanged at 5.4%, 6.8% and 6.7%, respectively.

Equities

NASI and NSE 25 increased by 1.73% and 0.84% respectively, while NSE 20 decreased by 1.13%. Market capitalization also increased by 1.74% to 2.79 trillion. The performance was driven by gains recorded by large-cap stocks. Top gains were recorded in Safaricom Plc and NCBA group which gained by 3.5% and 2.0% respectively.

The Banking sector had shares worth Kshs 682M transacted which accounted for 32.57% of the week’s traded value, Manufacturing & Allied sector represented 14.17%, and Safaricom with shares worth Kshs 1Bn transacted, contributed 50.94%.

Top Gainers and Losers in the Equities Markets

Top GainersW-o-W
Limuru Tea10.00%
Standard Group Limited4.97%
Safaricom Plc3.48%
Olympia Capital Holdings2.56%
East African Portland2.53%
Top LosersW-o-W
BK Group-6.00%
Britam-5.45%
Kenya Power-5.03%
Kengen-4.39%
Eveready-4.39%

Alternative Investments

 Week BeforeWeek After% Change
Derivatives Turnover (million)5.472.51-54.07%
Derivatives Contracts8440-52.38%
I-REIT Turnover (million)0.981.36 38.20%
I-REIT Total Deals7259-18.06%

Global and Regional Markets

Global MarketsW-o-W
S&P 5001.82%
Dow Jones Industrial Average (DJI)1.58%
FTSE 100 (FTSE)1.95%
STOXX Europe 6002.65%
Shanghai Composite (SSEC)-0.55%
MSCI Emerging Markets2.12%
MSCI World Index2.16%
Continental MarketsW-o-W
FTSE ASEA Pan African Index2.28%
JSE All Share2.81%
NSE All Share (NGSE)1.39%
DSEI (Tanzania)-0.82%
ALSIUG (Uganda)-0.11%

European stocks closed the week higher as a bright start to the earnings season helped ease investor concerns about higher inflation. European banks recovered all their pandemic losses to pre-covid levels. European Central Bank’s president also reported that Europe’s inflation upswing is still seen as temporary and there are no signs yet that the recent surge is becoming embedded in wages.

U.S. stocks ended the week higher after a week of strong quarterly earnings for the big banks and financial institutions which provided strong third-quarter US earnings. Investors are however still watching for signs of impacts from supply chain disruptions and inflation risks due to increased oil prices.

Asia Pacific stocks recorded a mixed performance at the end of the week, with China releasing better-than-expected economic data and concerns about easing of the U.S debt ceiling. People’s Bank of China Governor stated that regulators will continue to curb monopolistic behavior among internet platforms and strengthen consumer and data protection.

On the global commodities markets, Crude Oil WTI closed the week high by 3.69% and the ICE Brent Crude increased by 3.9%. Gold futures prices increased by 0.62% to settle at $1,768.30.

Week’s Highlights

  • The Energy and Petroleum Regulatory Authority reinstated fuel subsidy, cutting down fuel prices for the first time since June. Petrol and diesel prices were reduced by Kshs 5 per litre while kerosene reduced by Kshs 7.28 per litre. This is despite increased global prices for crude oil and landing costs of fuel.
  • Banks’ pre-tax profits surged 53.2% to Kshs 113.4 billion in the seven months to July, pointing out continued recovery from the pandemic due to easing of containment measures and roll-out of vaccines. This comes at a time when banks increased lending and downsized non performing loans due to a rise in repayments and property auctions.
  • African Development Bank has named Kenya, Egypt Nigeria and South Africa as top investment destinations in Africa, accounting for more than 80% of investment. The four countries also attracted the highest foreign direct investment in the past 10 years, reflecting a measure of concentration of private equity and venture capital in the region.
  • World Bank projects that Sub-Saharan Africa is set to rebound from the pandemic-induced recession, with growth expected to expand by 3.3% in 2021 – an increase of 1% from the April 2021 forecast. The rebound is currently fueled by increased commodity prices, easing of Covid-19 containment measures and recovery in global trade. The outlook for 2022/2023 still remains below 4% due to a slower economic recovery in advanced economies and emerging markets.
  • Kenya has been rated “B+” by Agusto & Co. Limited, a Pan African Credit Rating Agency. The lower rating was attributed to Kenya’s elevated debt levels amidst a shrinking GDP on account of the Covid-19 pandemic, depreciation of the Kenyan Shilling against major trade currencies, rising inflation and high unemployment rates. The outlook still remains positive due to a resilient agricultural sector in a well-diversified economy.
  • Kenya failed to back US President Joe Biden administration’s push for global minimum rate of tax on multinational companies since the deal will stop Nairobi from collecting taxes from tech giants such as Google, Facebook and Amazon. Members who join the the statement are obliged to withdraw their unilateral measures such as digital service tax and similar measures imposed on non resident companies.
  • Global oil prices surged to fresh multi-year highs on increased demand and subdued supplies, sparking inflation woes and weighing on most european stock markets. Brent jumped to a three-year high of $84.38 per barrel while WTI Crude jumped to a seven year high of $81.72 per barrel. This was worsened by the decision of OPEC and other major oil producers not to ramp up output.

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