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Equities Market
Stock prices were up 1.0% in the week ending 9th May 2025 as market activity went up on increased activities in the telecommunication and banking sectors. The upward rally was largely on supported by Safaricom earnings reported in the week and the expected quarter one (Q1-2025) banking financials due in May 2025.
As a result, the NSE market capitalization regained back 1.0% week on week (w-w) from KES 1,974.16Bn to KES 1,994.14Bn. NSE 10 went up 0.9% followed by NSE 25 and NSE 20 with gains of 0.5% and 0.1% respectively.
Weekly volumes traded jumped 172.8% from KES 36.78Mn to 100.34Mn shares to elevate the market turnover 41.2% up w-w from KES 1,267.51Mn to KES 1,789.51Mn. Market foreign participation dipped from 72.4% to 46.2% with a 280.9% spike in net foreign outflows from KES 10.70Mn to KES 40.77Mn.
Sector performance saw the banking sector emerge the top mover with a total of KES 827.90Mn from 22.58Mn shares with an average foreign participation of 54.8%. This was followed by the telecommunication and manufacturing sectors with turnovers of KES 548.08MN and KES 248.26Mn from 29.84Mn and 1.54MN shares respectively.
Safaricom emerged the week’s top mover with KES 548.08Mn from 29.84Mn shares whose price edged up 2.8% w-w from KES 18.00 to KES 18.50 per share. This was after reporting a 10.1% rise on its profits before tax from KES 84.68Bn in FY2024 to KES 93.21Bn in FY2025 ending March 2025. We retain a BUY recommendation on the stock’s share price with a fair value of KES 24.72 per share, find our earnings update shared last Friday for more.
Equity Group came second with a KES 306.71Mn turnover from 6.55Mn shares whose price gathered 2.7% to KES 40 per share ahead of its KES 4.25 dividend per share book closure set for 23rd May for a payment on 30th June 2025.
KCB Group took third mover position with 5.92MN shares of KES 227.84Mn as its share price thinned 0.1% to KES 38.50 per share trading ex-dividend. The Group recorded heavy foreign outflows of KES 154.97Mn compared to a foreign net inflow of KES 2.86MN recorded the week before.
In the coming week starting on 12th May 2025, we expect attention to remain in the banking sector with Co-op Bank Group expected to announce Q1-2025results on 15th May awhile Stanbic closes its KES 18.90 final dividend on 16th May 2025.
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Bonds Market
Secondary bonds market bonds value exchanged dropped 8.4% w-w from KES 39.04Bn of 715 deals to KES 35.74Bn. This was as the market focus shifted to the primary auction that happened on Wednesday, 7th May 2025, as investors anticipated for better discounts.
Secondary market attention remained on normal bonds which transacted a total of KES 25.20Bn or 70.5a5 of the week’s total value.
The re-opened FXD1/2022/25 remained the Centre of focus to emerge top mover with KES 6.30Bn as its yield to maturity edged up 23.3bps w-w from 14.0242% to 14.2576%.
May’s second primary auction for FXD1/2012/20 witnessed an oversubscription of KES 54.39Bn or 181.3% at an acceptance of KES 43.52Bn, representing a 145.1% performance against target. The paper received an aggressive bidding of 13.7334% as the government accepted a 13.6489% average yield to maturity against a coupon of 12.00%.
The accepted rate fell within our aggressive bidding guidance forecast rates.
A total of KES 84.99Bn bond maturity and coupon payments happened on Monday 5th April as KES 66.87Bn is due on Monday, 12th May 2025 from bond coupons and maturity.
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Yield Curve
The short end of the yield curve and the middle to the long-end of the curve generally shifted down with the short end being impacted by the down rates. The long-end shifted down faster following closure of the week’s auction.
The long-end was further impacted by entry of the two primary papers to the secondary market which saw investor demand for higher values and thus the drop in the middle to the long-end yields.
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Interbank
Interbank rate remained relatively stable in the week as the high liquidity demand for the week was offset by government securities payouts that happened in the week. Average interbank rate fell marginally from 9.94% to 9.90%.
Liquidity demand rose 37.9% week on week on increased demand towards pay as you earn (PAYE) tax payment that happened on 9th May 2025. Average liquidity demand however dripped 41.1% to KES 9.80Bn offset by low demand from Monday to mid-week.
Bank excess doubled from KES 7.70Bn to KES 14.30BN supported by the above government securities payouts which were not fully re-invested back.
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Treasury Bills
Weekly T-bills auction was oversubscribed at KES 50.81Bn with KES 50.71Bn being accepted, representing a 211.3% performance against the weekly target of KES 24.00Bn. Market focus remained on the 6-month and one year papers whose returns remained nearly stable, see table below.
The performance was heavily supported by KES 49.69Bn rollover re-investments from the KES 49.94BN maturing on Monday, 12th May 2025.
In the coming week we expect oversubscriptions to remain supported re-investments from the KES 35.64Bn maturing Monday, 19th May 2025.
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Currency
The Kenya shilling strengthened in the week, gaining 0.2%, 0.8%, 0.9% and 0.4% against the US dolla, the British pounds, the Euro and the Japanese yen, respectively.
The gains mainly emanated from the rising forex reserves which hit above USD 10Bn at USD 10,291Mn, sufficient for 4.6 months of import cover according to the Central Bank of Kenya. This representing an additional USD 542Mn or 5.6% in comparison to USD 9,749MN recorded last the week before.
We attribute the faster rise to be inflows from the bilateral agreements between Kenya and the People’s Republic of China that will see developments in various sectors ranging from infrastructure (both road and rail referred to as belt and road memorandum of understanding (MoU)), trade and manufacturing and educations MoUs. We had earlier expected inflows of about KES 126Bn from these bilateral agreements.
