Foreign Exchange Reserves

The usable foreign exchange reserves stood at USD 7,221 million (3.90 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 appreciated against the Dollar, the Sterling Pound and the Euro to exchange at KES 144.06, KES 181.75 and KES 155.73 respectively. The observed appreciation against the Dollar is attributed to improved diaspora remittances and tourism inflows.

CurrencyYTD ChangeW-o-W Change
Dollar-8.24%-1.23%
Sterling Pound-9.06%-0.97%
Euro-10.32%-0.78%

Liquidity

Liquidity in the money markets tightened, with the average inter-bank rate increasing from 13.42% to 14.04%, as tax remittances more than offset government payments. Open market operations remained active.

LiquidityWeek (previous)Week (ending)
Interbank rate13.42%14.04%
Interbank volume (billion)40.5323.62
Commercial banks’ excess reserves (billion)27.3037.40

Fixed Income

T-Bills

T-Bills remained over-subscribed during the week, with the overall subscription rate decreasing to 154.06%, down from 177.79% recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 247.57% while the 182-day T-Bill and 364-day T-Bill had subscription rates of 74.21% and 196.51% respectively. The acceptance rate decreased by 32.81% to close the week at 62.43%.

T-Bonds

In the secondary bond market, there was a higher demand for the week’s bond offers. Bond turnover increased by 609.5%, from KES 24.03 billion in the previous week to KES 170.5 billion. Total bond deals also increased by 258.93% from 336 in the previous week to 1,206.

Eurobonds

In the international market, yields on Kenya’s Eurobonds decreased by an average of 0.12% compared to the previous week, 0.82% month-to-date and 0.24% year-to-date. The yields on the 10-year Eurobonds for Angola and Zambia also decreased. Below is a summary analysis of performance for individual bonds.

BondYTD ChangeM-o-M ChangeW-o-W Change
2018 10-Year Issue-0.44%-1.18%-0.07%
2018 30-Year Issue0.16%-0.27%-0.08%
2019 7-Year Issue-1.01%-2.20%-0.18%
2019 12-Year Issue0.03%-0.58%-0.13%
2021 13-Year Issue0.25%-0.30%-0.04%
2024 6-Year Issue-0.42%-0.42%-0.19%
Equities

NASI, NSE 20, NSE 25 and NSE 10 settled 1.92%, 1.00%, 3.06% and 3.40% higher compared to the previous week, bringing the year-to-date performance to 0.94%, 1.85%, 3.71% and 3.83% respectively. Market capitalization also gained 1.93% from the previous week to close at KES 1.45 trillion, recording a year-to-date increase of 0.94%. The performance was driven by gains recorded by large-cap stocks such as Equity, Co-operative Bank, NCBA, KCB and Safaricom of 8.04%, 6.61%, 3.58%, 3.27% and 2.29% respectively. This was however weighed down by the loss recorded by EABL of 3.38%.

The Banking sector had shares worth KES 835M transacted which accounted for 67.18% of the week’s traded value, Manufacturing and Allied sector had shares worth KES 16.5M transacted which represented 1.33% and Safaricom, with shares worth KES 353.6M transacted represented 28.43% of the week’s traded value.

Top Gainers and Losers in the Equities Markets

Top GainersYTD ChangeW-o-W
Eveready16.95%11.29%
I&M Holdings8.02%8.65%
Equity19.88%8.04%
East African Cables-2.04%7.87%
HF Group20.00%6.98%
LosersYTD ChangeW-o-W
BK Group-9.44%-13.11%
Standard Group-11.63%-10.00%
Unga Limited-8.31%-9.65%
Crown Paints4.29%-8.75%
BOC Kenya-8.54%-8.54%

Alternative Investments

LosersWeek (previous)Week (ending)% Change
Derivatives Turnover (million)1.201.8050.09%
Derivatives Contracts23.0016.00-30.03%
I-REIT Turnover (million)0.000.00-100%
I-REIT deals00.0000.00-100%

Global and Regional Markets

Global MarketsYTD ChangeW-o-W
S&P 5007.29%1.66%
Dow Jones Industrial Average (DJI)3.76%1.30%
FTSE 100 (FTSE)-0.54%-0.42%
STOXX Europe 6003.58%0.83%
Shanghai Composite (SSEC)-0.50%3.88%
MSCI Emerging Markets Index-0.00%0.83%
MSCI World Index5.24%1.53%
Continental MarketsYTD ChangeW-o-W
FTSE ASEA Pan African Index-2.29%0.90%
JSE All Share-3.16%-0.01%
NSE All Share (NGSE)34.23%-3.52%
DSEI (Tanzania)0.10%-0.07%
ALSIUG (Uganda)4.91%2.45%

The US stock market ended the week in the green amid waning optimism for aggressive Federal Reserve rate cuts this year, buoyed by Nvidia gains which propelled the chipmaker to add stock market value by $277 billion. This made S&P 500 become the first ETF to top $500 billion in assets.

European stocks recorded a mixed performance during the week as Nvidia’s blockbuster quarterly report boosted global sentiment. However, data showing that Germany’s GDP fell 0.3% in the fourth quarter after stagnating for two quarters fueled recession woes. Additionally, new survey data from GfK showed that UK’s consumer confidence declined in February, an indication that inflation continues to weigh down optimism on economic recovery.

Asia Pacific Stocks also recorded a mixed performance, fueled by concerns over higher-for-longer interest rates. Japanese markets stocks recorded gains ahead of key inflation data. Investor sentiment was also weighed down by U.S inflation and interest rates.

Week’s Highlights

  • Kenya’s Government pending bills as of 31st December 2023 amounted to KES 539.9 billion. A large chunk of it (83.1%) relate to state corporations, which are owed to suppliers and contractors while 16.1% relate to ministries, state departments and other government agencies. In the same period, net domestic borrowing amounted to KES 210 billion, against a target of KES 356.2 billion. Gross public debt increased by KES 1.931 trillion to KES 11.14 trillion, with external debt accounting for 54.7% while domestic debt accounted for 45.3%. The increase in the public debt is attributed to external loan disbursements, exchange rate fluctuations and uptake of domestic debt during the period.
  • Kenya’s trade deficit narrowed to $9.85 billion in 2023, supported by a faster growth in expenditure on shipments from foreign countries, reduced demand for primary goods and a decline in imports of machinery, fuel and raw materials, a sign that production activities in key areas such as manufacturing and construction has significantly reduced. The value of imports declined by 10.61% to nearly KES 17.12 billion, marking the first full-year contraction since 2020.
  • The National Treasury intends to issue a local foreign currency-denominated bond, which will complement domestic borrowing, in a bid to finance its budget. The government is exploring alternative sources of finances, among them, issuance of a Kenya Shilling syndicated debt, foreign currency-denominated bond, and private placement for both local and external markets. This will ensure improved Dollar liquidity thus enhancing the value of the Shilling.
  • Revenue from imports declined by KES 7 billion in the first half of 2023/2024 financial year. Imports from China declined in 2023, signalling subdued consumption during the year amid a high cost of living. According to the data from the General Administration of Customs of the People’s Republic of China (GACC), Kenya imported goods worth $7.87 billion from China, a 1.11% decline compared to $7.96 billion worth of imports in 2022. However, the gap between goods declared in Kenya and those declared in China widened to nearly KES 500 billion, an indication of under-declaration in order to evade- tax.
  • Singapore’s manufacturing production rose 1.1% year-on-year in January 2024, from a revised 2.4% drop in December but coming less than market expectations growth of 4.5%. The upturn was mainly due to a strong rebound in output for precision engineering (27.7% vs -5.9% in December) and an acceleration in activity for transport engineering (43.5% vs 0.2%), and chemicals (3.8% vs 3%). Meanwhile, output declined for electronics (-3.4% vs 6.2%), biomedical manufacturing (-25.9% vs -24.1%), and general manufacturing (-3.4% vs -17.1%). On a monthly basis, manufacturing activity shrank 5.7%, slipping further from a downwardly revised 1.3% decline in the prior period and against market forecasts of a 3% rise.
  • The Canadian Dollar fell past 1.35 per USD in late February, amid the growing likelihood of imminent rate cuts by the Bank of Canada this year. The loonie faced additional headwinds due to a pessimistic outlook for foreign currency inflows, as oil benchmarks declined further as global demand soured. Furthermore, January headline inflation declined to 2.9%, significantly lower than the previous month’s 3.4% and below the expected 3.3%. The BoC’s trimmed-mean core rate also eased to a two-year low, supporting the position of doves in the Governing Council and increasing the probability of the central bank’s first rate cut in the second quarter of this year, while policymakers emphasized the impact of restrictive interest rates on Canada’s aggregate demand.
  • Brazil’s consumer confidence fell by 1.1 points to a 9-month low of 89.7 in February, pointing to the lowest gauge of confidence since May 2023. The decline was wholly attributed to a deterioration in future expectations (-2.3 to 97.9), as high-interest rates and private debt levels erode households’ expectations of their purchasing power. In turn, current conditions edged higher (+1 to 78.6) to rebound from two consecutive declines. The decline in aggregate consumer confidence was sharper for lower-income households and more subtle for those with higher incomes.

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