Kenyan markets upbeat after Moody’s positive rating

Kenya's economy is on an upward trajectory after receiving a positive rating from global ratings agency Moody's, signaling a potential comeback to the debt market. CNBC Africa sat down with Chad Nyakatura, Money Market Sales Manager at Stanbic Bank Uganda, to discuss the implications of this development and what it means for Kenya's future. The positive rating from Moody's, which changed Kenya's outlook from negative to positive, is a significant milestone for the country. This shift has been attributed to an anticipated improvement in liquidity risk and debt affordability for Kenya in the long term. Several key events have contributed to this positive outlook, including the passing of a supplementary budget, a $606 million disbursement from the IMF, and the implementation of the tax amendment act by the end of 2024. Additionally, favorable macroeconomic indicators such as low inflation at 3%, stable currency trading at 129 shillings to the dollar, and reduced interest rates ranging between 9 to 14%, have improved investor sentiment, particularly among offshore participants. These factors combined point towards a positive direction for the Kenyan government in addressing economic challenges and attracting foreign investments. Chad Nyakatura highlighted the importance of the positive rating from Moody's as a 'step in the right direction' for Kenya. He emphasized that the improved sentiment would likely enhance Kenya's position as a key regional trade partner within the East African region. The positive rating is seen as a lifeline for Kenya, which has faced challenges in stabilizing its currency, with the Kenya shilling currently trading at 129 to the U.S. dollar. The rating signals a potential end to the market volatility that the country has experienced in the past, providing a more stable environment for investors. Moving forward, attention is also shifting towards Uganda, where the equities market has seen significant growth in 2024, with the stock market index up by 40%. Price upticks in key counters like Kumeme, Stanbic Bank Uganda, and MTN Uganda have been driving this growth. However, changes in market dynamics, particularly with Kumeme's upcoming departure in 2025, could impact equity market activities, leading to a shift towards the fixed income space. As the conversation concluded, Chad Nyakatura touched on the global market dynamics, with a focus on U.S. President Donald Trump's calls for lowering interest rates. The potential impact of these policy changes on both developed and emerging markets remains uncertain, with implications for currency performance and investor behavior. While the Fed is expected to leave rates unchanged in an upcoming meeting, the market will continue to monitor the evolving economic landscape and policy decisions. Overall, Chad Nyakatura's insights shed light on the positive trajectory of Kenya's economy and the opportunities and challenges that lie ahead in the East African markets.