Rwandan market watch

Investors in Rwanda are abuzz with excitement following the recent acquisition of Prime Cement by cement giant Cimerwa in what is being hailed as one of the largest deals in the country's history. The move is set to have significant implications not only for the companies involved but also for the broader market landscape in Rwanda. CNBC Africa's recent interview with Kevin Karobia, Senior Research Investment Analyst at BK Capital, shed light on the expected market movements and the current state of the fixed income markets in the aftermath of the recent elections. The acquisition of Prime Cement by Cimerwa will allow the latter to bolster its production capacity and meet the surging local demand for cement, driven in large part by government-led infrastructure projects. With the market demand for cement in Rwanda exceeding the current supply, this deal positions Cimerwa to capitalize on the growing market opportunities. Moreover, Cimerwa's ability to cherry-pick assets in the acquisition is expected to further strengthen its market position and operational efficiency. The implications of the acquisition are not confined to the companies involved, but also extend to the stock market. Despite the majority shareholding in Cimerwa being acquired by National Cement Holdings, minority shareholders still hold undervalued stock, presenting an opportunity for potential buyouts in the future. The acquisition has the potential to impact market dynamics, albeit in a muted manner due to the low free float available for trading on the counters. The Rwandan stock market currently sees significant activity from big players like Pralirwa, BK Group, and INM Bank, which are likely to remain prominent despite the Cimerwa-Prime Cement deal. Turning to the fixed income markets, Rwanda has witnessed robust oversubscriptions of Treasury bills and bonds, indicating strong liquidity and investor interest. The recent reduction in the Monetary Policy Committee rate by 50 basis points has further fueled market activity, with the interbank rate easing to 7.8%. Investors have shown enthusiasm for government papers, with T-bill subscription rates exceeding 300% and bond subscription rates surpassing 130%. This liquidity influx is expected to drive enhanced secondary market activity in the fixed income space, providing more avenues for investors to diversify their portfolios. The Rwandan franc has exhibited stability and even a slight appreciation against the US dollar in 2024, a contrast to the higher depreciation rates seen in the previous year. Factors such as reduced food imports, increased agricultural production, a surge in mining exports, and IMF support have all contributed to the currency's resilience. The favorable economic indicators bode well for the Rwandan market landscape and offer opportunities for both local and foreign investors to capitalize on the country's economic growth and stability. Overall, the acquisition of Prime Cement by Cimerwa and the positive market movements in Rwanda reflect a promising outlook for investors and underscore the country's resilience amid evolving economic conditions.