Weekly Commentary – 6th May 2022

Foreign Exchange Reserves

The CBK’s usable foreign exchange reserves remained adequate at USD 8,401 million (4.99 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 but gained against 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	115.77	115.90
Euro	122.83	122.53
Sterling Pound	146.09	144.92

Liquidity

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

	Week Before	Week After
Interbank rate	4.76%	4.80%
Interbank volume (billion)	17.04	17.32
Commercial banks’ excess reserves (billion)	25.30	29.20

Fixed Income

T-Bills

T-Bills were generally under-subscribed during the week attributed to tightened liquidity in the money markets. The acceptance rate increased by 0.39% to close the week at 100%. The acceptance rate reflect the government’s increasing appetite for cash to fund the budget.

T-Bill	Yield (% Rate)		Subscription Rate
	Week Before	Week After	Week Before	Week After
Overall			117.37%	70.20%
91 day	7.50%	7.58%	254.56%	131.32%
182 day	8.46%	8.54%	87.01%	37.16%
364 day	9.78%	9.84%	92.86%	78.79%

T-Bonds

The bonds market had a lower demand for the week’s bond offers. Bonds turnover fell by 69.6% to 5.75B down from 18.91B in the previous week.

Eurobonds

In the international market, yields on Kenya’s Eurobonds rose by an average of 51 basis points. The yields on the 10-year Eurobonds for Angola and Ghana also increased.

Equities

NASI, NSE 20 and NSE 25 decreased by 3.62%, 2.50% and 3.04% respectively. The market capitalization also decreased by 3.63% to 2.256 trillion. The performance was driven by losses recorded by large-cap stocks. Top losses were recorded in Safaricom, EABL, KCB and StanChart which decreased by 5.04%, 3.47, 3.20% and 2.92% respectively.

The Banking sector had shares worth Kshs 21M transacted which accounted for 1.51% of the week’s traded value. Manufacturing & Allied sector had shares worth 212M transacted which represented 15.32% and Safaricom, with shares worth Kshs 961M transacted represented 69.15% of the week’s traded value.

Top Losers	W-o-W
Scan Group	-13.13%
EAAGADS	-9.09%
Nation Media	-7.69%
TransCentury	-7.56%
BOC Kenya	-6.83%

Alternative Investments

	Week Before	Week After	% Change
Derivatives Turnover (million)	2.78	1.61	-42.13%
Derivatives Contracts	21	16	-38.46%
I-REIT Turnover	0.119	0.081	-32.14%
I-REIT Deals	21	17	-19.05%

Global and Regional Markets

Global Markets	W-o-W
S&P 500	-0.21%
Dow Jones Industrial Average (DJI)	-0.24%
FTSE 100 (FTSE)	-2.08%
STOXX Europe 600	-4.55%
Shanghai Composite (SSEC)	-1.49%
MSCI Emerging Markets	1.46%
MSCI World Index	0.51%

Continental Markets	W-o-W
FTSE ASEA Pan African Index	-1.06%
JSE All Share	-6.39%
NSE All Share (NGSE)	2.62%
DSEI (Tanzania)	-0.99%
ALSIUG (Uganda)	-3.35%

U.S stocks closed the week low, as loss in Consumer Services, Basic Materials and Technology sectors led shares lower. This follows as a better-than-expected monthly jobs report fueled investor bets on more aggressive Federal Reserve rate hikes ahead, stoking fears of slowing economic growth. This is putting an increased focus on equity valuations as investors assess whether recently discounted shares are worth buying in the face of a hawkish Federal Reserve and widespread geopolitical uncertainty.

European stocks closed the week low as investors cautiously monitored the prospects of bigger interest rate hikes to tame decades-high inflation. Further disruptions are attributed to the Ukarine war and the lockdowns in China in light of a new wave of COVID-19 infections.

Asia Pacific stocks closed the week low as high inflation, tighter monetary policy, and COVID-19 lockdowns in China continue to both darken the economic outlook and depress investor sentiment. Australia, Hong Kong’ and South Korea reported a decrease while Japan registered a slight increase.

On the global commodities markets, Crude Oil WTI closed the week higher by 6.24% and the ICE Brent Crude increased by 6.73%. Gold futures prices decreased by 0.74% to settle at $1,182.80.

Week’s Highlights