Unlike the usual dearth of the market, secondary market turnover picked up to 2.4 billion shillings Wednesday on the last day of the offer period for this month’s bond.
This was driven by the shilling’s liquidity levels as well as investors trying to exit medium term positions before the end of the first half and a section of the buy side trying to find a home for liquidity.
“We believe we have hit the bottom of the drop in rates seen over the last three weeks and are about to begin the budget cycle where interest rates come under upward pressure, the extent of which will depend on how the CBK manages the liquidity crunch in the coming 8 weeks,” Said analysts from Genghis Capital.
The overnight rate remained range bound at 3.9 percent on volumes of 16.7 billion shillings, while the shilling lost marginal ground to 101.12 but remain within our expectations for this week.
Activity is still heavy on large-cap counters, which economic analysts expect to continue this week.
In addition to foreign investor activity moving the counters, analysts expect the local funds to take the position on the large caps as we near 1st half reporting period and fiscal year-end for most statutory pension funds.