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Recent Topicals

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Currency and Interest Rates Outlook

Feb 19, 2023

The Kenyan shilling has recorded a Year to date depreciation of 1.8% against the US Dollar to close at Kshs 125.6 as at 17th February 2022, from Kshs 123.4 on 3rd January 2023, adding to a 9.0% depreciation in 2022 and further depreciation of 3.6% and 7.7% in 2021 and 2020 respectively. Key to note, this is the lowest the Kenyan shilling has gone against the dollar. The continued depreciation has been mainly driven by an ever present current account with of Kenya being a net importer and the import bill being in US Dollars. Being a net importer has also left Kenya susceptible to external shocks that have inflated the import bill and negatively affected the shilling such as the high global crude oil prices occasioned by persistent supply chain constraints worsened by the ongoing Russia-Ukraine conflict. The inflated import bill has led to increased dollar demand from importers against a lower supply of hard currency. Additionally, the aggressive public debt accu...

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Update on Kenya Mortgage Refinance Company (KMRC)

Feb 12, 2023

The Kenya Mortgage Refinance Company (KMRC) is as a non-deposit taking, public-private partnership (PPP) firm formed by the Government of Kenya and regulated by the Central Bank of Kenya (CBK). The primary mandate of KMRC is to ensure sustainable home financing in the country, by providing long-term funds to primary mortgage lenders (PMLs) such as; banks, microfinance institutions, and SACCOs at low and fixed interest rates. KMRC was incorporated in April 2018 under the Companies Act 2015, and authorized by the CBK to begin lending operations in September 2020. During 2021, the company received 12 applications and disbursed funds worth Kshs 1....

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Unit Trust Funds Performance, Q3'2022

Feb 5, 2023

Unit Trust Funds (UTFs) are Collective Investment Schemes that pool funds from different investors and are managed by professional fund managers. The fund managers invest the pooled funds in a portfolio of securities such as equity stocks, bonds or any authorized financial securities, with the aim of generating returns to meet the specific objectives of the fund. Following the release of the Capital Markets Authority (CMA) Quarterly Statistical Bulletin-Q4’2022, we analyze the performance of Unit Trust Funds, whose total Assets Under Management (AUM) have been steadily increasing, being among the most popular in...

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Equities Outlook:

Jan 29, 2023

In 2022, the Kenyan equities market was on a downward trajectory with NASI, NSE 20 and NSE 25 declining by 23.7%, 12.4% and 16.6%, respectively. Large cap decliners in 2022 included Safaricom, Bamburi, KCB Group, Diamond Trust Bank (DTB-K) and Equity Group of 36.7%, 17.5%, 16.4%, 16.0% and 15.6%, respectively. The performance during the year was mainly attributable to increased sell offs by foreign investors as they exited the market. Additionally, interest rate hikes in developed economies such as United States caused dollar investments to be more appealing and thus lowering their appetite for risky investments in emerging markets such as Kenya. Following the poor performance in the equities market in 2022, the market valuation closed the year at a price to earnings ratio (P/E) of 6.7x, 42.0% lower than the 11.5x recorded at the end of 2021 and 47.0% below the 12-year historical average of 12.6x. On the other hand, the equities market closed the year at a dividend yield of...

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Ruaka Research Note 2023

Jan 22, 2023

In recent years, Ruaka has become one of the fastest growing satellite towns in the Nairobi Metropolitan Area (NMA), and has become a major centre for Real Estate investment and development. Offering relatively higher returns of up to 7.5%, compared to satellite towns average of 6.9%, as highlighted in our Annual Markets Review 2022. This has also driven a construction boom in Ruaka supported by the growing demand for residential property. Additionally, there has been a shift by investors towards satellite towns attributable to availability of cheaper land for development in these areas, coupled with improved accessibility owing to key infrastructural developments that have unlocked value for investors. In 2022, land prices in satellite towns recorded the highest capital appreciations of 11.1% and

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