Kenyan Markets: Secondary Turnover, The Shillings and the Week Ahead

Secondary Market Turnover

Secondary market turnover declined 16.68 percent on a week-to-week basis to close at 10.10 billion shillings according to stats released by Genghis Capital.

During the week, activity was heavy on the infrastructure bond (IFB) segment with supply emanating from the foreign desk. In aggregate, the IFBs totaled 4.91 billion shillings and contributed 48.62 percent of the week’s turnover. This was a marked increase from 1.73 billion shillings recorded in the previous week.

The top five traded bonds accounted for 72.43 percent of turnover with the IFB1/2018/15yr emerging as the week’s dominant paper.

The yield on the August bond issue, FXD1/2018/10yr, averaged 12.41% in the week although some cross-book trades were executed at lows of 11.80 percent. The yields on the paper have fallen 27.8 bps since the auction

The Shillings Against The Dollar

The shilling slipped slightly against the US dollar although received support from inflows at the tail end of the week.

The US Bureau of Labour Statistics announced non-farm payrolls at 201,000 in August against an expected 191,000.

The dollar remains a refuge currency amidst growing global trade concerns. Usable foreign exchange reserves held at the central bank remained steady at USD 8.58Bn; equivalent to 5.71 months of import cover.

The Money Market:

The average interbank rate declined 59bps to 5.14 percent in the week buoyed by the improved liquidity condition.

The improved liquidity condition was attributed to increased government payments at the end of the prior month. This resulted in the regulator mopping up excess cash through repo transactions. The weekly volumes traded in the interbank market retreated 17.40 billion shillings to 76.45 billion.

This Week Ahead

Market analysts expect secondary market trading to be supported by investors who are balancing their portfolios as the market approaches the end of the quarter. Analysts also anticipate demand to remain elevated in the short-to-medium term papers coupled with the infrastructure bonds.