All eyes on Fed, Bank of Japan's rate decisions

The week ahead is crucial for global markets as the US Federal Reserve and the Bank of Japan announce their monetary policy decisions, shaping market sentiments. In addition, Kenya's Monetary Policy Committee (MPC) is set to meet under the controlled interest rate regime for the first time. Alykhan Satchu, CEO of Rich Management, provided insights on these developments and their impact on emerging markets in an interview with CNBC Africa. The Federal Reserve's decision is eagerly awaited, with all eyes on the possibility of a rate hike. Satchu noted that any surprise move by the Fed could have significant implications for emerging markets. Meanwhile, the Bank of Japan, known for surprises, could also influence market dynamics. Central banks have been encouraging steeper yield curves to reflate banks, potentially affecting emerging markets. The strength of the American currency has been impacting commodity prices, particularly in oil and equities. Satchu expressed a bearish outlook on oil, citing oversupply concerns and skepticism over OPEC reaching a deal. Gold and soft commodities like coffee and cocoa have been faring better, with positive effects seen in economies like the Ivory Coast. Looking ahead, the interview touched on the upcoming Bank of England announcement in November amidst Brexit uncertainties. Satchu expressed a more optimistic view, predicting a rebound for Sterling and a lesser impact on the UK economy than initially feared. The need for a deal post-Brexit remains paramount. Turning to Kenya, Satchu discussed the MPC meeting and the impact of new regulations on the banking sector. While no immediate changes are expected, the banking landscape may see consolidation and digital transformation to adapt to the new environment. Concerns about credit growth and transmission mechanisms were also highlighted. The discussion then shifted to Nigeria as a case study, where Satchu emphasized the need for a free market approach. Lessons from Nigeria's Naira devaluation saga underscored the importance of market flexibility. In contrast, Kenya's free market credentials were deemed crucial to avoid similar pitfalls. In the stock market arena, attention was drawn to banking stocks' recovery and investors diversifying into other sectors. Notable rallies in beaten-down stocks like KenGen and Kenya Airways were observed, alongside Transcentury's impressive turnaround. Karuma Capital's investment in Transcentury highlighted unrecognized value in the business, with shareholders benefiting from the miraculous rally. As global central banks and local regulators navigate monetary policy decisions, market participants brace for potential shifts in sentiments and asset valuations. The interplay between economic fundamentals, policy announcements, and investor behavior will continue to shape market outcomes.