Rwanda equities market muted week-on-week

Rwanda's equities market has had a relatively unchanged performance week-on-week, with both the Rwanda Share Index and the Rwanda All Share Index maintaining stability. However, there has been a noticeable downward trajectory in yields on all government papers, indicating a shift in investor interest towards the fixed income market. Kevin Karobia, Senior Investment Analyst at BK Capital, highlighted the dynamics between the fixed income and equities markets, noting a tug and pull effect where increased interest in fixed income leads to lower volumes in equities and muted performances in share prices. Karobia pointed out that the decline in yields on government papers is a reflection of the current market dynamics, with sustained investor interest driving over-subscription levels for almost eight weeks. Last week alone, investors offered $63 million, significantly higher than the $23 million sought by the government through the National Bank of Rwanda (BNR). This high demand has prompted a reduction in rates as the government aims to manage domestic borrowing by accepting bids at lower levels. The Rwandan franc has been under pressure, experiencing a steep depreciation against the US dollar. Karobia highlighted the challenges posed by the depreciation, particularly in a market heavily reliant on imports. The rising global oil prices have further exacerbated the situation, leading to an inflated import bill, with fuel being a significant import commodity. As a net importer, Rwanda faces pressure to secure foreign currency to fund essential imports, including materials for infrastructure projects like the Bugesera airport. With an imbalance between import and export bills, the currency is expected to face sustained pressure in the coming months. Overall, the market sentiment in Rwanda remains cautious as investors navigate the evolving landscape of the equities and fixed income markets. The equilibrium between the two sectors continues to sway based on investor behavior and external factors such as global oil prices. As the government monitors and adjusts domestic borrowing rates to manage investor demand, stakeholders are keeping a close watch on the performance of the Rwandan franc and its impact on the economy.