Foreign Exchange Reserves

The usable foreign exchange reserves stood at USD 6,919 million (3.70 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 but depreciated against the Sterling Pound and the Euro to exchange at KES 142.80, KES 182.21 and KES 155.67 respectively. The observed appreciation against the Dollar is attributed to improved diaspora remittances and tourism inflows.

CurrencyYTD ChangeW-o-W Change
Dollar-9.04%-0.50%
Sterling Pound-8.82%0.25%
Euro-10.36%0.01%

Liquidity

Liquidity in the money markets increased, with the average inter-bank rate decreasing from 14.09% to 13.55%, as government payments more than offset tax remittances. Open market operations remained active.

LiquidityWeek (previous)Week (ending)
Interbank rate14.09%13.55%
Interbank volume (billion)15.6520.54
Commercial banks’ excess reserves (billion)27.4020.00

Fixed Income

T-Bills

T-Bills were over-subscribed during the week, with the overall subscription rate increasing to 174.24%, up from 99.47% recorded in the previous week. The 91-day T-Bill received the highest subscription rate at 515.47% while the 182-day T-Bill and 364-day T-Bill had subscription rates of 100.63% and 111.35% respectively. The acceptance rate increased by 0.43% to close the week at 96.32%.

T-Bonds

In the secondary bond market, there was a lower demand for the week’s bond offers. Bond turnover decreased by 30.77%, from KES 52.36 billion in the previous week to KES 36.24 billion. Total bond deals decreased by 28.78% from 1,164 in the previous week to 829.

In the primary bond market, CBK released auction results for the re-opened 3-year bond FXD1/2024/003 which sought to raise KES 40.0 billion. The issues received bids worth KES 43.07 billion, representing a subscription rate of 107.69%. Of these, KES 34.27 billion worth of bids were accepted at a weighted average rate of 18.42%.

Eurobonds

In the international market, yields on Kenya’s Eurobonds decreased by an average of 0.33% compared to the previous week, 0.23% month-to-date and 0.55% year-to-date. The yields on the 10-year Eurobonds for Angola also declined while that of Zambia increased. Below is a summary analysis of performance for individual bonds.

BondYTD ChangeM-o-M ChangeW-o-W Change
2018 10-Year Issue-0.78%-0.23%-0.31%
2018 30-Year Issue-0.11%-0.17%-0.20%
2019 7-Year Issue-1.37%-0.25%-0.63%
2019 12-Year Issue-0.33%-0.21%-0.28%
2021 13-Year Issue-0.02%-0.21%-0.23%
2024 6-Year Issue-0.71%-0.32%-0.33%
Equities

NASI, NSE 20, NSE 25 and NSE 10 settled 1.77%, 1.10%, 1.27% and 1.40% higher compared to the previous week, bringing the year-to-date performance to 3.19%, 3.13%, 5.77% and 5.99% respectively. Market capitalization also gained 1.77% from the previous week to close at KES 1.48 trillion, recording a year-to-date increase of 3.18%. The performance was driven by gains recorded by large-cap stocks such as EABL, Stanbic and Safaricom of 8.75%, 4.13% and 2.96% respectively. This was however weighed down by the losses recorded by Co-operative and KCB of 3.07% and 2.36% respectively.

The Banking sector had shares worth KES 237.4M transacted which accounted for 30.82% of the week’s traded value, Manufacturing and Allied sector had shares worth KES 1.49M transacted which represented 19.36% and Safaricom, with shares worth KES 344.8M transacted represented 44.76% of the week’s traded value.

Top Gainers and Losers in the Equities Markets

Top GainersYTD ChangeW-o-W
Transcentury-9.62%17.50%
Sanlam17.00%14.71%
Sameer5.73%14.29%
Liberty42.49%10.00%
EA Breweries-1.08%8.75%
LosersYTD ChangeW-o-W
ScanGroup-1.38%-8.51%
Kenya Power7.14%-7.41%
Standard Group-28.94%-5.82%
BOC Kenya-7.32%-5.00%
EA Cables2.04%-4.76%

Alternative Investments

LosersWeek (previous)Week (ending)% Change
Derivatives Turnover (million)6.051.51-75.05%
Derivatives Contracts47.0015.00-68.09%
I-REIT Turnover (million)0.000.000.00
I-REIT deals0.000.000.00

Global and Regional Markets

Global MarketsYTD ChangeW-o-W
S&P 5008.03%-0.26%
Dow Jones Industrial Average (DJI)2.67%-0.93%
FTSE 100 (FTSE)-0.80%-0.30%
STOXX Europe 6005.17%1.14%
Shanghai Composite (SSEC)2.83%0.63%
MSCI Emerging Markets Index1.21%1.21%
MSCI World Index7.01%0.81%
Continental MarketsYTD ChangeW-o-W
FTSE ASEA Pan African Index-10.27%-6.86%
JSE All Share-2.94%1.45%
NSE All Share (NGSE)33.35%2.61%
DSEI (Tanzania)0.17%-0.18%
ALSIUG (Uganda)6.59%1.59%

The US stock market ended the week in the red zone, weighed down by a cooling off in the chip sector. This was largely driven by a steep decline in Nvidia’s share price, which fell by 5.4%. Investors also assessed mixed signals from the latest jobs report. While it indicated a stronger-than-expected February payroll figure, downward revisions for January and December gains, along with an unexpected rise in unemployment, raised concerns.

The European stock market was volatile during the week, as investors digested the mixed bag of central bank signals. While the European Central Bank (ECB) held the key interest rates at record highs, they also hinted at a potential shift. The ECB acknowledged that inflation is easing faster than expected, opening the door for rate cuts later in 2024.

The Asian stock market closed the week in the green zone, buoyed by strong trade data from China, which boosted investor sentiment across the region. China’s trade surplus for the first two months of 2024 came in much higher than expected, suggesting resilience in their export market despite global economic concerns.

Week’s Highlights

  • The Central Bank of Kenya (CBK) has issued licenses to 19 new Digital Credit Providers (DCPs), bringing the total to 51, in an effort to address concerns about high-cost credit and broaden access to potentially more competitive loan options. This expansion follows the licensing of 32 DCPs in March 2023 and reflects the growing interest in this sector, as evidenced by the 480 applications received since March 2022. CBK has also collaborated with relevant regulators, like the Office of the Data Protection Commissioner, to ensure a responsible licensing process.
  • Kenya Revenue Authority launched e-TIMS Lite, a simplified electronic invoicing platform for all businesses, including those in the informal sector and those previously exempt due to turnover below KES 5 million. This mandatory shift to e-invoicing, accessible through e-Citizen, *222# USSD and a web portal, aims to streamline the invoicing process and improve tax compliance. The launch comes just 27 days before the deadline, 31st March 2024, for all businesses to start using e-TIMS.
  • The Stanbic Bank Kenya PMI increased to 51.3 in February from 49.8 in January. This marks the first expansion since August 2023. All sub-components improved, with output and new orders reaching their highest levels in over a year. Companies increased hiring and purchasing activity. Inflationary pressures eased, with input costs rising at the slowest pace in over two years. However, business sentiment hit a record low, with most companies avoiding positive forecasts for the year ahead.
  • The Energy: Electricity Market, Bulk Supply and Open Access Regulations, 2024, have been gazetted, marking a significant step towards a potentially more competitive and consumer-centric energy landscape in Kenya. These regulations pave way for open access to the electricity grid, empowering consumers to choose their electricity supplier. This shift has the potential to foster competition within the sector, potentially leading to improved service and more competitive pricing for consumers. The regulations are expected to come into effect within six months.
  • East Africa Growth Holding received approval from the Competition Authority of Kenya (CAK) to acquire a 10.13% stake in I&M Group from British International Investment (BII). This acquisition grants East Africa Growth Holding certain rights regarding board appointments, business plans and senior management changes. This will result in East Africa Growth Holding acquiring indirect joint control of I&M Group alongside existing shareholders. BII will receive KES 6.5 billion from the sale of its stake.
  • The European Central Bank (ECB) kept its key interest rates unchanged at record highs during its March meeting. This decision reflects the bank’s effort to balance the risk of recession with ongoing inflation concerns. The ECB revised its inflation projections downward to 2.3% in 2024 from 2.7%, 2.0% in 2025 from 2.1%, but maintained the 2026 projection at 1.9%. Furthermore, core inflation is expected to be 2.6% in 2024 from 2.7%, 2.1% in 2025 from 2.3% and 2.0% in 2026 from 2.1%. Economic growth projections were also adjusted. The ECB has revised its growth forecast to 0.6% in 2024, 1.5% in 2025 and 1.6% in 2026.
  • The S&P Global US Composite PMI increased to 52.5 in February 2024 from 52.0 in January and exceeded the initial estimate of 51.4. This marks the highest level in eight months. New orders expanded at a slightly slower pace than in January but remained at the second-fastest rate since mid-2023. The increase in new export orders for goods contributed significantly to the positive growth. Input prices rose at their slowest rate since October 2020. However, businesses passed on some costs to consumers, leading to higher selling prices. Job growth remained modest, with manufacturers hiring more and service providers facing challenges due to cost-cutting and labour shortages.
  • The Eurozone Composite PMI rose to 49.2 in February 2024 from 47.9 in January, exceeding market expectations and marking the highest level in eight months. Service sector activity grew for the first time since July 2023, but manufacturing output decreased. While Ireland, Spain and Italy show signs of expansion, France and Germany remain in contraction. The rate of decline in new orders slowed and employment growth reached a seven-month high. Input cost inflation hit a ten-month high and businesses raised output prices at the fastest pace since May 2023. Additionally, business confidence continued to improve for a fifth consecutive month.

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