Activity this week slowed down compared to the previous week. Turnover stood at Kes.3.3bn on a volume of 126M shares, down from Kes.3.8bn on 145M shares posted the previous week.
The NSE 20 Share Index was down 53.65 points or 1.45% points during the week to stand at 3652.79 points. All Share Index (NASI) shed 1.52 points or 1.07% during the week to settle at 140.46 points. The NSE 25 Share Index shaved off 44.01 points during the week to settle at 3964.56 points.
The Kenya National Bureau of Statistics (KNBS) on Thursday said the economy expanded by 5.9 percent in the first three months of the year compared to five percent in the same period last year.Q1 2016 economic growth could be attributed to the growth in key sectors such as agriculture.
Tourism sector also expanded significantly, on account of improved security and the lifting of the travel bans. We anticipate further growth in the tourism sector in the second and third quarters, being the peak season for tourists into our country. The robust economic growth offers some impetus to the annual economic growth projection of 6.0% by the International Monetary Fund and the World Bank.
The Bond Market recorded reduced activity with bonds worth Kes.6.8bn transacted compared to Kes.15.5bn posted the previous week.
This week, the 91-day paper decreased further to 7.05% from 7.16%, the 182-day paper climbed to 9.39% from 9.24% before while the 364-day paper dropped to 10.68% from 10.74% earlier. The decline speed of the interest rates is seemingly slowing down indicating signs of an uptrend soon.
Inflation rate for the month of June rose to 5.8%, falling within our estimates. This was triggered by the rise in food prices due to poor weather conditions and the higher cost of fuels. With a rise in inflation, which is one of the key considerations in formulating the monetary policy, we are of the view that the MPC may not increase the CBR immediately since the inflation still lies within their target range and there are no severe macroeconomic shocks in the market.
The Kenyan shilling performed exceptionally well this week following the outcome of the Brexit voting. The local currency gained 10.74% against the sterling, 2.52% against the Euro and a meagre 0.18% against the US dollar. The pound collapsed to its lowest level since 1985 last week, as Britain voted to leave the European Union.We expect further strengthening of the Kenya shilling against the Euro and the Sterling Pound, and weakening against the US Dollar.