Market News

CBR May be Adjusted in March MPC meeting

BY Soko Directory Team · March 3, 2017 07:03 am

Tea prices at the latest Mombasa auction held steady at KES 289; the price in the previous sale. Data from the East African Tea Traders Association indicates that sale volumes increased by 300,000 kilograms to 7,590,000 kilograms; 1,044,308 kilograms (13.76%) remained unsold. On an annual basis, the auction volumes still remain depressed in comparison to last year largely on account of the prolonged drought effect.

Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for the month of February is set to be released today. The monthly data is based on a survey of 400 private sector companies across diverse sectors. The index is a composite index based on five individual indexes with the following weights: new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of items purchased (10%). A reading above 50 indicates expansion while sub 50 print shows contraction. The January PMI reading came in lower at 52.0 from 54.10 recorded in December.

Fixed Income

The market remains subdued after the inflation number shot up to 9.04% as most of the market takes a step back to re-strategize, the underlying inflation however is still below the target rate of 5% at 3.45%. This is however, a rise from the previous month at 2.80%. Despite the contraction in Private Sector Credit Growth to 4.0% it is disconcerting that rate continues to rise aggressively, this lends more to our view that the Central Bank Rate (CBR) rate may be adjusted in March during the MPC meeting. Turnover on the secondary market came off to KES 1.9Bn from the previous day’s KES 2.5Bn, as turnover continues to be centered around the medium to long term. The demand overhang on the short end of the curve is heavy but supply continues to be quite tight with reinvestment risk a considerable problem in the current liquidity environment.

Trading Expectation

Market turnover picked up closing at KES 571.8Mn due to an uptick in volume of Safaricom Ltd. (NSE: SCOM). The counter witnessed a net selling interest from the foreign side which had a 98% participation of its trading activity. East African Breweries Ltd (NSE: EABL) came in second with a 99% foreign participation. KCB Group Ltd. (NSE: KCB) and Equity Group Holdings Ltd. (NSE: EQTY) also saw a more than 85% participation from the foreign side. We may see foreign participation maintained at above 50% in today’s trading session as the week comes to a close.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory