Rwandan market watch

Investors in Rwanda are eagerly anticipating the upcoming dividend season as the new fiscal year commences in July. With the recent pause in auctions for two weeks, investors are turning to the secondary market in search of lucrative opportunities. Kevin Karobia, Senior Research Investment Analyst at BK Capital, highlighted the active participation of pension funds, insurance companies, and banks in the treasury bills market. Particularly, banks are interested in short-term investments, with a preference for papers maturing in November 2024. As these papers approach maturity, increased activity is expected in the secondary market. This trend signals a robust market movement, driven by a focus on short-term, high-yielding investments. Moreover, the Rwandan franc has exhibited a remarkable stability in recent months. Despite a gradual depreciation, the currency has shown resilience with reduced pressures on the foreign exchange market. The disbursement from the IMF at the end of May is anticipated to fortify forex reserves and bolster the overall FX situation. This liquidity injection provides the central bank with the flexibility to intervene in the market when necessary, mitigating excessive demand for foreign exchange. While a moderate depreciation is projected due to trade imbalances and increased import costs, the rate is anticipated to be more favorable than last year's steep decline. The steady performance of the Rwandan economy amidst global economic challenges underscores its resilience and attractiveness to investors. In the wake of recent protests in Kenya, concerns have arisen regarding potential ramifications on the regional economy. The Kenyan market experienced a slight downturn in investor sentiment, notably impacting blue-chip counters like KCB. This shift comes at a time when stock prices were on an upward trajectory, leading to a correction in market gains. While it is premature to ascertain the full extent of spillover effects on neighboring markets, early observations suggest a cautious approach from asset managers. The fixed income market in Kenya, which had previously attracted significant interest due to favorable returns and a robust currency, is now under scrutiny. Fund managers are monitoring the situation closely to assess the impact on both equities and fixed income securities. Despite localized challenges, the East African markets remain resilient and poised to navigate the evolving economic landscape with prudence and adaptability.