Weekly Commentary – 20th May 2022

Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 8,294 million (4.93 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 observed overall depreciation against the Dollar is attributable to increased Dollar demand from energy and commodity importers.

	Week Before	Week After
Dollar	116.12	116.41
Euro	121.77	122.54
Sterling Pound	142.97	145.13

Liquidity

Liquidity in the money markets relatively eased, supported by government payments, which offset tax remittances. Open market operations remained active.

Diaspora remittances for the month of March stood at $355.04M representing a 18.63% and a -2.35% change year on year and month on month respectively.

	Week Before	Week After
Interbank rate	4.61%	4.43%
Interbank volume (billion)	12.52	18.27
Commercial banks’ excess reserves (billion)	25.30	22.80

Fixed Income

T-Bills

T-Bills were over-subscribed during the week attributed to eased liquidity in the money markets. The acceptance rate decreased by 12.18% to close the week at 81.93%.

T-Bill	Yield (% Rate)		Subscription Rate
	Week Before	Week After	Week Before	Week After
Overall			102.28%	116.30%
91 day	7.68%	7.76%	131.97%	136.88%
182 day	8.72%	8.83%	79.26%	102.52%
364 day	9.86%	9.88%	113.41%	121.85%

T-Bonds

The bonds market had a lower demand for the week’s bond offers. Bonds turnover declined by 17% to 13.81B down from 16.65B in the previous week.

In the primary market, the Central Bank opened a tap sale of fixed coupon bonds FXD1/2022/010 and FXD1/2021/025 targeting to raise 10B. The average yields for the 10yr and 25yr bonds are 13.49% and 13.976% while the coupons rates are at 13.49% and 13.924% respectively. The sale will close on 23rd May latest.

Eurobonds

In the international market, yields on Kenya’s Eurobonds rose by an average of 26.4 basis points. The yields on the 10-year Eurobonds for Angola and Ghana also increased.

Equities

NASI, NSE 20 and NSE 25 decreased by 5.11%, 3.82% and 3.50% respectively. The market capitalization also decreased by 5.12% to 2.065 trillion. The performance was driven by losses recorded by large-cap stocks. Top losses were recorded in KCB, Equity, Cooperative Bank and Safaricom which decreased by 1.26%, 1.76%, 5.31% and 7.95% respectively.

The Banking sector had shares worth Kshs 524M transacted which accounted for 31.99% of the week’s traded value. Manufacturing & Allied sector had shares worth 159M transacted which represented 9.69% and Safaricom, with shares worth Kshs 925M transacted represented 56.40% of the week’s traded value.

Top Losers	W-o-W
NBV	-18.85%
Transcentury	-14.41%
Centum	-13.36%
Scangroup	-12.81%
Olympia	-12.28%

Alternative Investments

	Week Before	Week After	% Change
Derivatives Turnover (million)	1.75	2.01	15.17%
Derivatives Contracts	8	22	175.00%
I-REIT Turnover	0.176	0.311	76.48%
I-REIT Deals	26	54	107.69%

Global and Regional Markets

Global Markets	W-o-W
S&P 500	-3.05%
Dow Jones Industrial Average (DJI)	-2.09%
FTSE 100 (FTSE)	-0.38%
STOXX Europe 600	-0.50%
Shanghai Composite (SSEC)	2.02%
MSCI Emerging Markets	3.07%
MSCI World Index	-1.68%

Continental Markets	W-o-W
FTSE ASEA Pan African Index	-6.39%
JSE All Share	-1.60%
NSE All Share (NGSE)	-0.23%
DSEI (Tanzania)	0.42%
ALSIUG (Uganda)	0.02%

U.S stocks closed the week mixed, as gains in the Healthcare, Telecoms and Oil & Gas sectors led shares higher while losses in the Consumer Goods, Industrials and Consumer Services sectors led shares lower. The performance is fueled by worries over sky high inflation, a hawkish Federal Reserve and future economic growth.

European stocks closed the week higher with a boost from defensive sectors after hopes of an economic recovery in China were bolstered by more central bank stimulus following a cut in its five-year loan prime by a larger than expected 15 basis points (bps), boosting global market sentiment despite a rise in COVID-19 cases in Shanghai. However, there was a decline on a one week basis.

Asia Pacific stocks closed the week high as investors continue to closely monitor impacts of Federal Reserves hiking interest to curb rising inflation. However, concerns of an economic slowdown and China’s ongoing COVID-19 outbreaks could lead to more volatility. South Korea, China, Australia, Hong Kong’ and Japan also reported an increase.

On the global commodities markets, Crude Oil WTI closed the week higher by 0.17% and the ICE Brent Crude increased by 0.61%. Gold futures prices increased by 1.92% to settle at $1,845.10.

Week’s Highlights