Rwanda market watch

Rwanda's equities market has seen a subdued performance in the month of September as market activity slowed down with investors taking positions in anticipation of quarter three earnings. CNBC Africa had a conversation with BK Capital's Senior Investment Analyst, Kevin Karobia, to delve into the expected market movements. Karobia highlighted that last week saw a muted performance in the equities market with no changes across all the stocks, a trend that has persisted into the current week. Additionally, turnover from an equities perspective significantly dropped to around 21 million Rwandan francs from over 900 million the previous week, indicating a decline in investor interest in equities. Conversely, the fixed income side witnessed increased activity, with subscription rates for shorter-dated papers standing at 167 percent. This shift in focus towards short-term and fixed income investments reflects a certain level of apathy towards the equities market. However, as the quarter three results begin to unfold, Karobia expects a resurgence in investor interest in equities. The dominance of Bralirwa stock in market activity was noted, with investors also positioning themselves ahead of the anticipated quarter three earnings. The BK Group counter also attracted significant turnover last week, accounting for more than 91 percent of market activity. Both counters are expected to see heightened activity as the quarter progresses, with Bralirwa's projected 100 percent payout of profits after tax as dividends serving as a strong incentive for investors. The current dividend yield of 14.7 percent is expected to improve in the future, making the stocks even more enticing for investors. Looking at the currency front, the Rwandan franc has been depreciating against major world currencies, with a six percent loss against the USD compared to the same period last year. This downward trend is also observed against other regional currencies, such as the Kenyan shilling, which has depreciated over 20 percent against the franc. From a balance of payments perspective, the outlook for the USD does not appear optimistic due to the continued growth in imports. However, sectors like mining and tourism are expected to bolster FX reserves and alleviate some liquidity challenges in the market. The regional currency dynamics have seen the Kenyan shilling firming up, attracting capital inflows and foreign investor participation in the Kenyan stocks. The upcoming Fed decision on interest rates is expected to impact capital flows, potentially benefiting emerging markets like Rwanda and Kenya. Foreign investors are eyeing the cross-listed counters in the region, with a call for actions to stimulate trading of these counters on the Rwanda Stock Exchange (RSE) to match the robust activity witnessed on the Nairobi Securities Exchange (NSE).