Kenya’s financial markets delivered a mixed performance in the week ended February 19, with a sharp surge in bond trading standing in contrast to softer activity at the equities market, according to the latest weekly bulletin issued by the Central Bank of Kenya (CBK).
Turnover in the domestic secondary bond market rose by 57.21 per cent, underscoring renewed investor appetite for fixed-income securities during the period.
The stronger activity in bonds was reinforced by robust demand at Treasury bill auctions. Total bids amounted to Ksh 70.9 billion against an advertised offer of Ksh 24.0 billion, translating into an oversubscription rate of 295.6 per cent.
Reflecting this strong demand, Treasury bill yields declined across all tenors. The 91-day paper closed at 7.59 per cent, the 182-day at 7.75 per cent, and the 364-day at 8.90 per cent, signalling sustained investor preference for government securities.
In the international market, yields on Kenya’s Eurobonds increased by an average of 8.44 basis points over the week. CBK noted that Eurobond yields for Côte d’Ivoire also rose, while yields for Angola declined.
Equity market posts mixed results
At the Nairobi Securities Exchange (NSE), equity performance remained uneven.
The Nairobi All Share Index (NASI) declined by 0.86 per cent, while the NSE 25 Share Index and the NSE 20 Share Index gained 0.63 per cent and 3.29 per cent, respectively.
Overall market activity weakened during the week. Market capitalisation fell by 0.86 per cent, and equity turnover declined by 8.84 per cent, despite a 1.58 per cent increase in the number of shares traded. The data point to subdued trading activity, even as select counters posted gains.
Shilling stability and adequate reserves
The Kenya shilling remained stable against major international and regional currencies, exchanging at Ksh 129.02 per US dollar on February 19, unchanged from the previous week.
Foreign exchange reserves rose to USD 12,659 million, equivalent to 5.5 months of import cover, remaining comfortably above the statutory minimum requirement of four months.
Liquidity conditions in the money market were supported by active open-market operations. Commercial banks’ excess reserves averaged Ksh 44.3 billion above the 3.25 per cent cash reserve ratio requirement, while the Kenya Shilling Overnight Interbank Average Rate (KESONIA) held steady at 8.77 per cent, marginally lower than 8.78 per cent recorded the previous week.
Global inflation continues to ease
Globally, inflationary pressures continued to moderate across major economies. Headline inflation in the United States eased to 2.4 per cent in January from 2.7 per cent in December, while the United Kingdom recorded a decline to 3.0 per cent from 3.4 per cent. Japan’s inflation also slowed to 1.5 per cent, down from 2.1 per cent.
International oil prices edged higher during the week, with Murban crude trading at USD 70.76 per barrel on February 19, compared with USD 68.89 a week earlier.
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