The East Africa (EA15)

The East Africa 15 (EA15) highlights on 15 of the most traded and highly capitalized stocks in the region on a monthly basis. The primary purpose of the EA15 is to give investors a description and perspective of the regional stock markets’ performance.

Kenya: Nairobi Securities Exchange (NSE)

The monetary policy committee reviewed the Central Bank Rate downward to 8.25% extending the loose monetary stance. The decision was on the back of a stable shilling, inflation remaining within target and improving private sector credit growth- which expanded by 7.1% in the year to December.

Adequate CBK foreign exchange reserve has helped the Kenya shilling to weather short-term shocks against major world currencies. To the US dollar, the shilling averaged lower by 0.74% to Kes100.6 compared to last month with highs of Kes100.4 recorded.

Liquidity improved month-on-month as interbank averaged at 4.4% compared to 4.9%. Short-term debt rates were relatively stable as the 91-day, 182-day and 364-day T-bills averaged at 7.2%, 8.3% and 9.7% respectively.

The NSE recorded a slump over the period largely attributed to profit taking. The All Share and the NSE-20 indices were in the red by -4.5% and -5.4% respectively. Similarly, all the blue-chip counters lost ground; NMG (-10.5%), Safaricom (-5.1%), Equity Bank (-3.48%), KCB (-2.88%), EABL (-1.4%). On the green board, Unga Ltd gained 5.95%.

Safaricom is looking to hit another milestone as it bids to enter East Africa’s most populous country, Ethiopia. The company is constituting a consortium for the billion-dollar telecom license bid expected in April this year. The prospect of this bid is likely to keep the stock volatile in the short term.

 Tanzania: Dar es Salaam Stock Exchange (DSE)

Tanzania tourism industry received a boost after the country was feted as the Best International Wildlife Destination. In recent times, the government has worked on improving the industry with efforts such as the revival of Air Tanzania which has introduced new routes and increased frequencies, formation of public-private-partnerships (PPP) to realize the full potential of the various tourism circuits as the country target two million visitors this year. Tourism remains the major foreign currency earner with a direct and indirect contribution of about 15% to the economy.

The Central Bank is keen to improve liquidity in the market so as to boost private sector borrowing. This has seen an extended retention of a loose monetary position. It is however key for the government to balance its involvement in the market not to crowd out the private sector.  The Tanzanian shilling maintained its stability exchanging at an average of TZS2300 for the past month.

Annual headline inflation has been on a decline gradually owing to lower price of food related items. January inflation rate stood at 3.7%.  Short-term government debt instruments were relatively stable as three, six and 12-month T-bills averaged at 4.0%, 4.2% and 5.8% respectively. Increased liquidity over the month saw oversubscription of debt instruments.

The DSE index inched up by 0.05% while the local index-TSI rose by 2.3% driven by CRDB which leaped a massive 80% over the period hitting a one-year high on improved year-on-year net earnings of 87%. CRDB is trading at 0.6 times its book value suggesting more room for upward trajectory in the medium term. DSE shed -3.1% while rest of the stocks were quiet.

Uganda: Uganda Securities Exchange (USE)

Uganda’s first review of CBR rate of the year saw the committee retain the accommodative monetary position at 9.0%, as anticipated by the market.  The stance has kept inflation in check as well as support private sector growth. In spite of the time lag effect of the loose monetary stance on the market, lending rates have seen a decline to an average of 18% in addition to private sector credit growth of 12% in 2019 from 6% in 2018.

The Ugandan shilling held its ground against the dollar. Annual headline inflation fell to 3.4% on a decline in transport and recreational index compared to 3.6% previously. Short term interest rates for the period yielded at an average of 10%, 11.5% and 12.5% for the 91-day, 182-day and 364-day T-bills respectively.

The All Share Index declined by 2.6%, the local indicator followed suit at 1.3%. Umeme recorded the highest gain for the period at 7.8%, National Insurance Corporation (NIC) and Stanbic Uganda (SBU) trailed at -4.8% and -4.0%.

Rwanda Stock Exchange (RSE)

The Rwandan government is keen on making its budget reach self-sufficiency standards. To support this, the government intends to pass a bill that will raise public spending by about 5.0% this year through taxation and indirect tax revenue channels.  Rwanda is projected to be the fastest growing economy in Africa this year at about 8%.

The current central bank rate of 5.0% is expected to keep inflation in check after breaching the 5.0% medium term target on the back of high food prices. The Rwandan franc is likely to remain subdued against major foreign currencies on lower imports. In addition, the policy rate is anticipated to continue encouraging and supporting credit growth to the private sector.

The Rwf weakened further by 0.3% against the US dollar to average at Rwf926.44 from Rwf923.23.  Short-term debt rates increased by 100, 35 and 45 basis points to an average of 6.1%, 6.8%, and 7.2% for the three, six and 12-month treasury bills.

The local index RSI recorded a 1.2% increment on the back of Bank of Kigali (BoK) price appreciation by 2.3%. The All Share Index marginally fell by 0.38% attributed to a slight price drop of cross-listed stocks. Bralirwa and CTL remained unchanged while I&M Rwanda (IMR) lost ground by -1.11%.

Source: NSE, DSE, USE, RSE

 Also Read: East African Trends: Trade, Investments, Forex and Policies –2020