Market turnover spiked on Tuesday to 2.4 billion shillings at the close of the month as the market reacted to news of the rate adjustment to 9 percent.
It was a sellers’ market across the curve with demand coming through on all tenors. Demand on the long end of the curve was also high as investor confidence in the rate direction rose.
“We expect more demand for the duration as the market searches for opportunities on the curve. Demand on the infrastructure bonds remains high with no supply,” said analysts from Genghis Capital.
The shilling continued to hold at 100.40 on the back of diaspora remittances which continue to hit new highs. On the other hand, the shilling liquidity continued its deterioration as it hit a high of 8.1 percent despite the regulator coming in every day to fund the market.
In Wednesday session, market analysts say that they do not expect any changes from the week’s trend so far.
Prices across the market are still expected to remain at current levels with not much movement unless there is an increase in demand or supply for counters.
Support for the main traded counters still remains at 46.25 shillings for Equity, 45.25 shillings for Kenya Commercial Bank, 28.25 shillings for Safaricom and 200 shillings for the East African Breweries. Analysts also expect turnover levels to also remain subdued.
Inflation in summery
Inflation for the month of July edged up to 4.35 percent according to stats released by the Kenya National Bureau of Statistics.
The upward trend was sustained by the marginal 0.12 percent y/y increase in Housing, Water, electricity and other fuels’ index.
The price of four-kilogram of charcoal decreased slightly by 0.53 percent but nonetheless remains elevated at 68.34 percent y/y. Food and non-alcoholic beverage index retreated 2.40 percent y/y, buoyed by the improved weather conditions.