The market turnover during the week stood at USD 31.85 million which was an equivalent of 3.9 billion shillings up 54.5 percent on a week-on-week basis.
The NSE 20 gained 3.1 percent during the week to close at 3,244.72 while NASI index gained 1.9 percent during the week to close at 137.80.
On the East African Community Markets, in Uganda, the USE ALSI gained 0.5 percent to close at 1,581.14 while USE LSI dropped 0.1 percent to close at 375.06 during the week. In Rwanda, the RSE RSI and RASI held stable to close the week at 122.35 and 127.60 respectively while in Tanzania, the DSEI gained 0.2 percent to close the week at 2,331.95 while TSI lost 1.9 percent to close at 3,430.75. Total turnover stood at TZS 7.9 billion on a Tanzanian market.
Market Turnover dropped on Friday as the market’s focus turned to the auction which closes on Tuesday. The market traded 1.3 billion shillings against the previous day’s number of 3.4 billion shillings; the rest of the week is expected to be slow until the auction results are announced. The market remains liquid with the CBK coming in on Friday to mop up 12.0 billion shillings in a 7-day repo.
Sentiment on the bidding levels as been quite varied in the market with previous CBK actions skewing what would otherwise have been a straightforward decision based on current fundamentals. Inflation is up 450bps year-to-date, we are at 70 percent of the domestic borrowing target for this fiscal year and what will be very likely a second supplementary budget passed by parliament with two months left to the close of the financial year.
The last two months of the FY2016/17 have KES 211.0Bn in maturities, the country is undergoing severe shortages of essential commodities and lower than average short rains and finally, it is an election year which together with the interest rate caps is girding growth to a halt. We feel the CBK will still maintain the same course of action it has the past six months in terms of auction behavior, as buckling now will serve no purpose but to cause panic in the fixed income market.