East Africa market watch

East African markets are witnessing a spike in investor interest on the government bonds and treasury bills, with Kenya and Uganda leading in new issuances. Daisy Anthea Nitwe, the Country Lead for Derivatives & Structured Solutions at Standard Bank Group in Kampala, Uganda, joined CNBC Africa to discuss the recent movements in the market and provide insights into the future outlook. Nitwe highlighted that the strong issuances are in line with the government's target to raise funds domestically, with Kenya benefiting from improved local currency liquidity and retabled tax measures boosting confidence in bond coupons. On the other hand, Uganda is facing liquidity tightness due to increased government borrowing targets leading to rising rates. Despite the divergence, Nitwe believes the yield curve will continue to trend upward unless offshore investors show renewed interest in the market. Furthermore, Nitwe addressed concerns about sovereign debt risks in Mozambique and Malawi, emphasizing that the credit rating downgrades in these countries have not spilled over to East Africa. While some price actions were observed in benchmark bonds, portfolio flows into the region remain strong, indicating investor confidence in the East African market's resilience. Additionally, Nitwe discussed the marginal weaknesses in the currency market for Uganda and Kenya, attributing the slight depreciation to seasonal factors such as corporate demand and year-end flows. However, she expects an appreciation in both currencies as diaspora and commodity flows support their value. Looking ahead to 2025, Nitwe predicts a seasonal trend for the Ugandan currency, with fluctuations expected in each quarter but an overall appreciation by year-end. Overall, despite challenges in the global economic landscape, East African markets are showing resilience and attracting investor interest due to strong fundamentals and proactive government measures.