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Recent Topicals

Investment Risk Analysis

Aug 28, 2022

All investments have a certain degree of risk owing to market conditions and the nature of specific businesses. In times of high uncertainty, investment risk tends to increase and decline during times of low uncertainty. Currently, the global economy is hailed by increased uncertainty emanating from elevated inflationary pressures, persistent supply chain bottlenecks, resurgence of COVID-19 infections and the prevailing geopolitical pressures. Closer home, Kenya has not been exempted with the uncertainty evidenced by increased investor sell-offs in the Nairobi Securities Exchange, increasing yields and the undersubscription of government securities. The uncertainty has also been reflected in the business environment characterized by slow activity with the average purchasing managers index (PMI) coming in at 48.8, in the first seven months of 2022. In light of the developments, we shift our focus to investment risks analysis in Kenya where we will discuss the types of investments ris...

Post Elections Economic Focus

Aug 21, 2022

Kenya, like many other countries world over, has faced unprecedented challenges in the recent years which has had a major setback on the economy. One major issue; supply chain bottlenecks remains apparent and continues to worsen with new challenges such as geopolitical pressures and anticipation of increased demand as economies recover. Where we stand, the country is dealing with several issues including a high cost of living stemming from the prevailing inflationary pressures and local currency depreciation, rising debt levels currently at 69.1% of GDP as of May 2022 and a deteriorating business environment as consumers continue to cut back on spending. As such, we expect the incoming government to roll up its sleeves, perform a balancing act, and devise ways to stabilize key macroeconomic indicators while also supporting the ongoing economic recovery. We recently covered a topical on the “Effects of Ele...

Kenya Retail Report 2022

Aug 14, 2022

In September 2021, we published the Kenya Retail Report 2021 themed “Rapid Expansion by Retailers to Cushion the Retail Sector,” which highlighted that the Kenyan retail sector performance recorded a 0.1% increase in the average rental yield to 6.8%, from 6.7% in 2020. The average occupancy rate and rent also increased by 1.8% points and 2.2% points, respectively, to 78.4% and Kshs 118 per SQFT in 2021 from 76.6% and Kshs 115 per SQFT in 2020, respectively. This was mainly attributed to an improved business environment as well as aggressive expansion by local and international retailers such as Carrefour and...

Progress of Kenyan Pension Schemes-2022

Aug 7, 2022

In the face of unprecedented economic occurrences such as the resurgence of COVID-19 infections and the persistent geopolitical pressures, the pensions industry continues to feel the impact in terms of both sustainability and adequacy, with the pension schemes registering lower returns hence a decline in their asset value. The economic uncertainties influence retirement benefit schemes through various ways including: i) Increased individuals exiting the schemes ii) A decline in the disposable income hence lower contributions, and, iii) Regulatory compliance challenges due to fair value losses in some of the asset classes invested in. Closer home, the pensions industry in Kenya has experienced steady growth over time, with the assets under management having grown at a 10-year CAGR of 14.4% to Kshs 1,547.4 bn in 2021 from Kshs 403.2 bn in 2011. However, pensions uptake is still low

Unit Trust Funds Performance, Q1'2022

Jul 31, 2022

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 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-Q2’2022, we analyze the performance of Unit Trust Funds, as the total Assets Under Management (AUM) have been steadily increasing and they are among the most popular investment options in the Kenyan market. We will further analyze the performance of Money Market Funds, a product under Unit Trust Funds. In our previous focus on Unit Trust Funds, we looked at the