Macro-Economic:
Tea prices edged up 3.39 percent in the latest weekly Mombasa auction from 295 shillings to 305 shillings.
Volume at the auction grew by 357,486 kilograms to 6.352 million kilograms, with 15.43 percent remaining unsold. Data from Tea Directorate however indicates that most factories are operating 40 percent below their installed capacity on account of the ongoing drought. This will have an impact of elevating tea prices in the upcoming auctions.
Fixed Income:
Activity on the secondary market, driven by trades on the long end of the yield curve and the infrastructure bonds, saw turnover tick up to 729 million shillings.
The Central Bank of Kenya mopped up 8.8 billion shillings in total bids across all the tenors at an average of 9.8 percent. The market continues to be liquid albeit the overnight rate edging up slightly to 7.4 percent and volumes going up to 9.9 billion shillings.
This build-up in liquidity is expected to impact the upcoming auction positively, with hopes from the market that it will suppress aggressive bids from investors who will be more concerned on securing an allocation.
Trading Expectation:
Market turnover notched 560 million shillings in yesterday’s trading with ARM Cement Ltd (NSE: ARM) being the highest traded counter. Foreign participation stood at 78 percent with most of the top counters – with the exception of Stanbic Holdings Plc (NSE: CFC) – having more than 50 percent controlled by foreigners. We expect the market to continue seeing foreigners coming in.