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 BeforeWeek After
Dollar115.77115.90
Euro122.83122.53
Sterling Pound146.09144.92

Liquidity

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

 Week BeforeWeek After
Interbank rate4.76%4.80%
Interbank volume (billion)17.0417.32
Commercial banks’ excess reserves (billion)25.3029.20

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-BillYield (% Rate)Subscription Rate
Week BeforeWeek AfterWeek BeforeWeek After
Overall117.37%70.20%
91 day 7.50%7.58%254.56% 131.32%
182 day8.46%8.54%87.01%37.16%
364 day9.78%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 Gainers and Losers in the Equities Markets

Top GainersW-o-W
Sanlam27.09%
Crown Paint10.00%
NBV7.41%
EA Cables6.80%
CIC Insurance3.81%
Top LosersW-o-W
Scan Group-13.13%
EAAGADS-9.09%
Nation Media-7.69%
TransCentury-7.56%
BOC Kenya-6.83%

Alternative Investments

 Week BeforeWeek After% Change
Derivatives Turnover (million)2.781.61-42.13%
Derivatives Contracts2116-38.46%
I-REIT Turnover0.1190.081-32.14%
I-REIT Deals2117-19.05%

Global and Regional Markets

Global MarketsW-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 Markets1.46%
MSCI World Index0.51%
Continental MarketsW-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

  • The Kenya National Bureau of Statistics (KNBS) released the Economic Survey 2022 highlighting performance of various sectors of the Economy. Below are key points to note from the release:
  • The Gross Domestic Product (GDP) grew by 7.5 per cent in comparison to a 0.3 percent contraction in 2020.
  • The balance of trade deficit increased by Kshs. 1.4 trillion on the back of a 30.9% growth in imports up to Kshs. 1.4 trillion while exports grew to Kshs. 743.7 billion.
  • 0.17 million Jobs were created in the formal sector and a further 0.75 million in the informal sector. The private sector is still the leading job creator in the market.
  • Various key sectors recorded contractions ie Agriculture, Forestry, Mining and Construction while Manufacturing, Transport, Financial, Accommodation and Food services registered a growth.
  • The national debt stands at Ksh 7.1T with 53.5% being external debt. A total of Kes 1.09T is expected to be used in debt servicing in FY 21/22.
  • Salaries in the private sector recorded the smallest growth in the past eleven years at an average of 2.24% growth.
  • Net savings in SACCOs rose to Kshs 17.5 billions on the back of a rise in deposits to Kshs 540.5 billion and loans at Ksh 523 billion.
  • The Capital Markets Authority (CMA) commenced a 30-day public exposure of the Public Offers Listing and Disclosures Regulations draft running from 02 May to 03 June 2022. CMA aims to increase and retain listings at the Nairobi Securities Exchange (NSE), support capital raising by Small and Medium Enterprises (SMES) and enhance investor protection through the new regulations set forward in the draft.
  • The East African Community (EAC) partner states has reached a consensus to levy the Common External Tariff (CET) on fourth band products capping the tax rate at 35 per cent on imports to the EAC. Therefore, importers are expected to pay higher taxes in a move aiming at stimulating local production and industrialization.
  • Kenyan officials resisted the push by the International Monetary Fund (IMF) to scrap the fuel subsidy program that has seen the government spend Sh49.164 billion to stabilize the petroleum prices. Treasury Cabinet Secretary said they reached an agreement with the IMF to sustain the program to cushion the economy from a sharp rise in the cost of living as a result of a global spike in oil prices. Tanzania announced a 9.5% increase for petrol and 17.1% increase for diesel following hikes of 12% and 21%, respectively in April.

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