Rwanda market update

Rwanda's fixed income market has continued to attract investors, with market performance remaining bullish into the close of July. The gains were mainly attributed to the listed brewer Bralirwa, which saw a 1.0 per cent increase in July 2024. However, despite the positive outlook, market turnover experienced a significant decline of 96.8 per cent, totaling Rwf 78.6 million, down from Rwf 2.5 billion in June 2024. Lyna Muganwa Kadigwa, Investment Research Analyst at BK Capital, provided insights into the market trends and performance during a recent interview on CNBC Africa. Throughout the month, government treasury bills were oversubscribed, with a subscription rate of 241 per cent, albeit a decrease from the previous month. Total bids remained high compared to the offered amount of Rwf 66.3 billion, with the central bank accepting the full amount, leading to a decrease in the acceptance rate. The bonds market also witnessed oversubscription, indicating a positive performance for both T-bills and T-bonds. In terms of equities, the market recorded a muted performance with no changes in prices for the previous week, causing a decrease in market turnover. The stagnant prices were influenced by the forces of demand and supply, indicating a shift in investor sentiment as the market approaches the end of the first half of the year and enters Q3. The year-to-date performance showed an increase of 5.9 per cent on both the RSE and the all-share index, driven by price changes in counters like Bank of Kigali and Bralirwa. The dividend payouts from these counters in the previous year and the anticipation of future dividends have attracted significant investor activity, leading to an uptick in the Rwanda share index. Regarding the Rwandan franc's performance, the currency experienced depreciation against the US dollar, with a notable depreciation rate of 0.3% in the past week. This depreciation was linked to the Rwandan franc's sensitivity to the no change in the US interest rate set the previous month. Additionally, the trade balance for June reflected a decreasing trend, attributed to the significant depreciation of the Rwandan franc. Looking ahead, market sentiment is expected to remain positive as Rwanda prepares for President Paul Kagame's fourth term inauguration. With no significant market changes observed during the recent elections period, analysts anticipate continued growth and stability under President Kagame's leadership, given his familiarity with the economy and his track record of driving progress in the country. In conclusion, Rwanda's fixed income market has shown resilience amidst a decline in market turnover. With optimistic outlooks for both the fixed income and equities markets, coupled with expectations of continued economic stability, investors are poised to navigate the evolving market dynamics and opportunities in Rwanda's financial landscape.