Secondary Turnover Spiked To 3.2 Billion Shillings

Secondary market turnover rose back up to end the day at 3.2 billion shillings with one large trade on the FXD1/2014/10 – 5-year tenor – and heavy trades on the infrastructure bonds.

The auction results from the re-opening of the FXD1/2019/2 and FXD1/2019/15 showed heavy subscriptions totaling 66 billion shillings with CBK accepting 23.4 billion shillings which were more than the 12 billion shillings offered.

The weighted average rate of the accepted 2-year bids came in lower-than-expectation at 10.328 percent while the 15-year paper fell within expectation at 12.768 percent.

This month’s bond issue was announced at the same time – FXD1/2019/5 and FXD1/2019/10 – with a face value of 50 billion shillings.

The issue size is 10 billion shillings higher than the usual auction size which we believe is driven by the success seen in the January auction.

The overnight rate dipped to 2.9 percent, a 54 percent drop from the previous day, while the USD/KES dollar pair remained strong closing the day at 100.15.

After Wednesday’s auction announcement, “we expect to see activity pick up on the 7-year to 10-year end of the curve as investors look to take up positions based on the expected decline in rates,” said analysts from Genghis Capital.

Market activity ticked up in Wednesday’s trading owing to a book-over trade on BAT which pushed turnover over 200 percent higher than Tuesday’s session.

The counter was driven by foreign investors who accounted for 91 percent of the total market activity. The desk remains active on the index counters where they persist in net selling activity.

“We expect foreign dominance to come off in today’s session with the absence of the book-over trade present in the previous session,” said Genghis Capital.

Investors say that they anticipate increased activity in banking stocks in anticipation of FY18 results next month driving gains in Equity and KCB. Additionally, activity is expected to remain on the index counters.