June 2024 Market Wrap-up Report

1. MONEY MARKETS

Money market fund rates have been on a consistent upward trend, with the average daily effective rate rising to 14.24% per annum in June, up from May’s average of 14.16% per annum.
The Lofty Corban Money Market Fund led the market with an average daily yield of 16.92% per annum, resulting in a net return of 14.38% after withholding tax. It was followed by Etica, Cytonn, Kuza, and Apollo Money Market Funds, which recorded daily average effective rates of 16.62%, 16.19%, 16.04%, and 15.65% per annum, respectively.

Daily Average Yields for MMFs in June

Dollar Money Market Fund Returns

Jubilee MMF USD fund claimed the top spot with an average return of 8.34%, followed by Etica. Kuza, Lofty Corban, and Dry Associates with daily average returns of 7.35%, 6.65%, 6.36% and 6.30%, p.a. respectively.

Fixed Income Funds

Etica and Jubilee Fixed Income Funds had impressive returns of 14.82%, followed by Madison, Kuza, and Zimele Fixed Income Funds, posting average daily effective returns of 14.79%, 14.64%, and 13.36%, respectively.

Special Funds

In the special funds category, Lofty-Corban Special MMF topped the table with a return of 16.82%.

Special Funds are unique in that they are given leeway to develop their asset allocation but with CMA guidance and oversight. Unlike traditional funds, which often adhere to rigid asset allocation models, Special Funds can craft and adjust their portfolios according to their unique investment objectives and market conditions. This flexibility allows fund managers to respond more dynamically to market opportunities and risks.

2. FIXED INCOME SECURITIES

Bonds

The Central Bank of Kenya (CBK) first reopened four bonds to raise KES 60 billion between the end of May and June 17th. These bonds included a tax element of 15% on the interest earned. The government successfully met its target, attracting bids totaling approximately KES 61 billion.
Following the closure of the initial sale, the CBK offered the same bonds in a tap sale to raise an additional KES 20 billion between June 18th and 20th. Once again, the target was surpassed, with the CBK accepting bids worth KES 23 billion.

Particulars of the Bonds

• The minimum amount an investor can invest is KES. 50,000.

Treasury Bills

T-bills performed fairly well with the 91-day T-bill being the most preferred by investors due to its short-term duration and the return. The average yield per duration was 15.97%, 16.69%, and 16.75% for the 91, 182 and 364 days T-bills respectively.

• The minimum investment amount is Kes.100,000

Additional info:

• The CBK retained the CBR rate at 13%
• Inflation reduced from 5.1% in May to 4.6% in June 2024

3. EQUITIES

In June, the Kenyan stock market experienced a downward trend, marked by significant decreases in major indexes such as NSE 20, NSE 25, and NASI, which declined by 3.9%, 3.4%, and 2.9% respectively. This negative performance was largely driven by losses in key stocks like KCB, Safaricom, and Equity, which experienced losses of 8.5%, 4.7%, and 2.6% respectively. Equities turnover for the month of June was USD 40.3 million, a 71% decrease from USD 138.1 million in May. Foreign investors displayed a bullish sentiment towards select blue-chip stocks, resulting in a net inflow of USD 3.6 million for the month, a 67% decrease from the net inflow of USD 11.1 million in May.

4. GLOBAL MARKETS

a) United States

• Stock Performance: Both the S&P 500 and Nasdaq hit new records, with monthly returns of 3.7% and 5.8% respectively.
• Nvidia’s Surge: Nvidia briefly became the world’s most valuable company, surpassing Microsoft. However, its stock dropped by 20% after peaking.

b) Europe

• Market Sentiment: Mixed feelings due to the French president’s call for a snap election. The pan-European STOXX 600 index fell 0.97%, while the UK’s FTSE 100 index dropped 0.45% ahead of the upcoming elections in July
• Interest Rates: The European Central Bank cut its interest rate to 3.75%, its first cut in five years. The Swiss National Bank also reduced rates to 1.25%. The Bank of England kept rates at 5.25%, despite inflation easing.

c) Asia

• China: The yuan weakened, and Shanghai Stock Exchange fell over 3%, erasing most of their gains for the year.
• Japan: The Nikkei 225 index rose over 2%, hitting its highest level since April.