East African markets watch

The earnings season has been in full swing, with listed companies releasing their trading numbers and revealing thin profit margins. To gain more insight into the current state of the East African markets, CNBC Africa interviewed Jibran Qureishi, the Head of Africa Region for Economic Research at Standard Bank Group. Qureishi highlighted various key points impacting the markets, including the monetary policy decisions in Kenya and Uganda, the stability of currencies, and the impact of fuel subsidies on government finances. These factors are crucial for investors and analysts looking to understand the economic landscape in the region. Starting with Kenya, Qureishi discussed the recent Monetary Policy Committee (MPC) meeting where the central bank chose to maintain a neutral policy stance rather than adopting a hawkish bias. He noted a shift towards an interest rate-based monetary policy, which could lead to improved transmission of monetary policy and better reflection of funding conditions in the banking sector. Additionally, Qureishi mentioned the surprise rate cut in Uganda, which came shortly after the World Bank suspended project support for the country. Despite initial currency fluctuations, he expressed optimism about the stability of the Uganda shilling and anticipated an appreciation bias in the near future due to expected inflows from the coffee season. Transitioning back to Kenya, the reintroduction of fuel subsidies raised questions about the government's efforts to rein in the public wage bill. Qureishi estimated the potential impact of the subsidies on government finances and suggested the possibility of a supplementary budget later in the year to address any additional expenditure. He also emphasized the importance of understanding the contributions to the Petroleum Development Levy and how they would be used to finance the subsidies. Overall, while challenges persist in the East African markets, particularly in relation to monetary policy and government spending, there are also opportunities for growth and stability, depending on policy decisions and external factors.