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March At A Glance




144.73 Ksh


115.38 Ksh




Kenya Inflation Rate

The Kenyan inflation fell to 6.5% in March 2016, compared to the 6.84% seen in the Month of February.  This is the lowest figure since September last year. The drop has been attributed to the falling in food prices, cooking gas prices and low petrol.

In the second half of 2015 the CBK, in reaction to rising in inflation and weakening of the shilling, raised the base lending rate to 11.5%, mopping up liquidity from the Money Markets. The monetary environment has a result stabilized this year as seen from the drop in inflation. The Shilling has also stabilized within the range of a 101 and 102 units to the dollar through this first quarter of the year. The foreign reserve are up to KSH 748.2 billion.

Analyst at Stratlink Africa and Citi have predicted that the CBK is likely to ease monetary policy gradually in the next quarter with the intention of lowering the cost of credit for bank borrowers. Should the CBK follow this path not only will it be a relief to the borrowers but to the bank that have increased their provision for bad loans in 2015.

Standard Chartered Bank, Chase Bank, National Bank and Bank of Africa are some of the lenders that more than doubled their provision for bad loans. The lenders have also recorded a steep rise in nonperforming loans, signaling the effect that tougher economic times has had on the pockets of borrowers. National Bank for instance has reported a 1.2billion loss. A loss that has been attributed to huge loss in bad loans that rose by 3.2billion towards the end of the year.

Capital Markets

The T-bills rates are expected to continue trending lower on the backdrop of a stable currency, low inflation pressure and government borrowing appetite remaining in check. Liquidity level is expected to be medium to high in the coming months.

Market data compiled by Standard Investment Bank for the first quarter of the year shows the NSE20 share index is 1.5% down through the first quarter of the year. Analyst say that although Kenya retains its attractiveness as an investment destination for foreign investors, they have been cautions about accelerating their investment due to mixed results from companies. 18 listed firms have issued profit warning since the start of 2015, with currency losses and higher interest rates eating into the revenue.

Although the benchmark NSE 20-share-index declined, the NSE All Share Index and the NSE 25 Share Index closed the quarter with some gains of 1.2 and 1.6 per cent respectively on the back of better performance by mid- and small-cap stocks. Investor attention now shifts to quarter one and half-year performance by the listed companies.

Standard Investment Bank analyst Eric Musau said lower inflation rates, a stable currency, positive economic growth and gains from low oil prices offer grounds for optimism going forward.


The Month of March saw a rally in stocks as Feds retained the interest rate at 0.25%.  Federal Reserve Janet Yellen helped ease anxiety about potential interest rate hike when she said the US central bank should proceed cautiously as it looks to raise the interest rates. These comments were echoed by Chicago Fed President Charlse Evans who said there was a high hurdle to raising the interest rates in April given low Inflation.

On the other hand Cleveland Fed President Loretta said waiting for until every piece of data lines up in the correct way means waiting too long and risks having to move rates up more aggressively in the future, with a negative impact on our economy.

Higher interest rates are generally bad for stocks as they reduce lending and investments making it harder for companies to expand. They also increase the strength of the Dollar making any dollar denominated investment expensive to take. Also any loans that were taken when the rates were cheap becomes expensive to replay.

A strong Dollar also affects most emerging economies that use the Dollar as their currency reserve. This devalues their local currencies.



The EU is experiencing slower growth from its emerging economies than most general population would like to see. Currently there is a lot of geo –political uncertainty that is affecting the EU economic growth. However some investors feel that the EU is on upward trend, mainly because the ECB’s monetary easing has lowered the interest rates making Europe denominated securities cheap to take up. Thus strengthening the euro currency against other currencies.

The looming referendum on whether Britain should leave the European Union has shaken confidence in the pound sterling.

On the 23rd of June the UK will settle a question that’s been rumbling close to the surface of Britain politics, Should they remain in the EU or go at it alone. The great uncertainty associated with leaving the EU is that no country has ever done it before.

Leaving the EU would result in an immediate cost saving, as the country would no longer need to contribute to the EU budget. Last year Britain paid GBP 13bn. However, no one is able to determine whether the financial advantages of EU membership, such as free trade and inward investment outweigh the upfront costs.

The EU is a single market in which no tariffs are imposed on imports and exports between member states. More than 50% of Britain exports go to EU countries. Britain also benefits from trade deals between the EU and other World Powers. By exiting the EU, Britain risks losing its bargaining power but could establish its own trade agreements.

Inward investment has slowed due to uncertainty of the outcome of the referendum. The fear is that should Britain, One of EU’s most powerful economies departs, this would open a Pandora’s Box which could lead to the collapse of the European Union.

Greece is on the lime light again. The IMF and the EU can’t seem to agree over Greece’s bailout. Greece signed up to a bailout worth up to 86 billion euros in 2015. So far it has received 21.4 billion euro. Athens could run out of money in July if this dispute is not resolved quickly.

The main reason why the bailout review hasn’t been completed is that the IMF and the European Commission are at loggerheads over what is needed. The IMF is both more hawkish and more dovish.

The fund thinks that if no new measures are taken, Greece will have a 1 percent primary deficit in 2018 – that is, before interest payments are taken into account. The commission expects a surplus of around 0.5 percent. As a result, the IMF believes Athens needs fiscal measures equal to 4.5 percentage points of GDP to hit the 3.5 percent 2018 target, while the commission argues 3 percentage points would do the trick.

On the other hand, the fund also thinks it would be impossible and counterproductive to inflict another 4.5 percentage points of austerity on Greece. It is arguing that 2.5 points is the most the country can take.

The snag is that, on the IMF’s figures, this would mean Greece would only achieve a 1.5 percent primary surplus in 2018. That, in turn, would mean that its euro zone creditors would have to be more generous in relieving the country’s debt load so that it is sustainable in the long run.

One way of resolving the impasse would be to kick the IMF out of the Greek program, as the government wants. It may seem odd that Tsipras wants to get rid of an institution that is arguing for more debt relief. But he is less concerned with the details of a debt deal that won’t kick in until the next decade than with getting a deal done fast. The premier presumably thinks this would revive his fast-fading popularity.

Tsipras will struggle to get the IMF monkey off his back, because Germany has been insistent that the fund stays in the game. Even if Angela Merkel wished to change her mind, the Bundestag parliament would be hostile to the idea. True, Germany doesn’t want to let Greece wriggle out of its commitment to a 3.5 percent surplus, and is reluctant to consider debt relief it actually agreed to last year. But it likes the fact that the IMF is stricter on structural reforms and making sure the numbers add up than the commission.

Saudi Arabia.

Deputy Crown Prince Mohammed bin Salman outlined his vision in a five hour interview with Bloomberg. 

In his vision, he plans to restructure some revenue generating sectors. The Prince said the authorities are weighing measures that include restructuring of subsidies, imposing a value added tax and levy on energy and sugary drinks as well as luxury items. Another revenue raising plan under discussion is a program similar to the U.S Green Card system that targets expatriates in the Kingdom.

This is such a radical shift that it’s being called the biggest economy shake up. For a country built on petrodollars since the first Saudi oil was discovered almost eight decades ago. The strategy would complement a plan to sell a stake in Saudi Aramco on the stock exchange and create the world’s largest sovereign wealth fund, steps meant to make the kingdom more reliant on investment income than oil within 20 years. The $2 trillion fund would be big enough to buy the four largest publicly traded companies on the planet.

There are currently no income taxes in Saudi Arabia. The government started raising the prices of fuel and utilities at the end of last year, including a move to raise those for gasoline by a minimum of 50 percent. That brought the price to the equivalent of 26 U.S. cents a liter at the end of March, the second-cheapest in the world after Kuwait, according to, which provides data and analysis on transport fuels.

The Saudi government is also planning to increase its debt in the meantime to help finance spending and test the market with a dollar bond later this year.

The government is in talks with banks to raise about $10 billion through a syndicated loan, two people familiar with the matter said last month. While Al-Sheikh declined to confirm the details and the potential size of the deal, he said it will be followed by the kingdom’s first international dollar bond as early as September.

Emerging Markets.


Russian stocks have been among the top performers in the world after an oil driven surge. This has caused a rift between strategists advising their clients to take Russian equities and those advising against them. JPMorgan Chase & Co to Julius Baer Group ltd and Bank of America Corp are advising their clients to buy them. On the other hand fund managers from UBS Wealth Management in New York to Union Bancaire Privee in London are skeptical that the rebound which closely followed a rally in commodity prices, will last very long.

Russia’s economy is forecast to contract 1.5 percent this year, according to the mean estimate of 44 economists surveyed by Bloomberg. They forecast that growth will resume at the beginning of next year, while in late December they saw the recovery starting in the third quarter of 2016. The world’s largest energy exporter is mired in its second year of recession as oil selling for less than half its five-year average price exacerbates the impact of sanctions linked to the Ukraine conflict.

Investors are taking short position as the fundamentals are still not right. Crude oil prices are still not high enough to caution the impact of the economic sanctions placed as well the political turmoil with Ukraine over Crimea.


Latin America

Latin America is among the world’s most vulnerable oil regions right now said Robert Campbell from Energy Aspect. That being said we have seen growth in various countries.

The growth has mainly been propelled by the surge in commodity well as policies put in place by the respective governments.


The Indian Economy has expanded 7.3% in the first Quarter revised down from 7.7% in the previous Quarter but in line with the market expectation. The Manufacturing sector surged 12.6% while farm output shrank 1%. GDP Annual Growth Rate in India has averaged 6.04% from 1951 to 2015 reported by the Ministry of Statistics and Programmed Implementation.

New forecast from the World Bank show India will be a bright spot amid gloomy outlook for developing countries. With a population of 1.2 Billion people and the World’s fourth largest economy, India has managed to develop its Agriculture sector into a power house that is now a net exporter.

The Prime Minister of India, Narendra modi launched the “Make in India” initiative to place India on the world map as a manufacturing hub and give global recognition to the Indian economy. The Government of India have set a target of increasing the contribution of Manufacturing output to 25% of the GDP by 2025 from the current 16%.

India, which is one of the biggest importers of crude oil in the world, is one of the biggest beneficiaries of the fall in crude oil prices,” says Sakthi Prakaash, the lead research analyst at Wealth Rays Securities, a broking, research, and corporate advisory firm based in Bangalore.

 This oversupply is helping reduce the country’s Import bill and by extension reduces the trade and fiscal deficits for the country as oil makes more than a third of India’s total import.




The month of March saw a rally in the commodities led by crude oil. Brent oil topped $ 42.50 in the month of March fuelled by an anticipation of an agreement among producers to freeze output.  The OPEC members and Non OPEC members had expressed interest to meet in Doha on April 17 to discuss on a deal to freeze output, with the intention of cutting down on supply.

This however is seaming more unlikely as the Saudi Prince reportedly said the Kingdom would only freeze output if Iran and other producers did the same. The Iranian Oil Minister Bijan Zanganeh was quoted saying that his country would increase production and exports until it regains its position once held before the sanctions were imposed.

Gold has risen by 16.2% in the first three months of this year, the biggest quarterly rise since 1986. This surge was due to concerns over global growth which battered equities and sparked a wave of safe haven buying.

Silver was up 1.5 percent at $15.42 an ounce, while platinum was 1.6 percent higher at $975.22 an ounce after touching a one-week high of $982.99. Palladium was up 0.2 at $562.95 an ounce.

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