East African market roundup

The East African markets continue to attract yield seekers and investors as they offer stable returns and attractive government paper. Roy Daniels, Head of Africa Trading at RMB, recently discussed the potential and opportunities in the region during an interview with CNBC Africa. He highlighted the trend of investors looking for higher yields and the return for yield in emerging markets, especially in sub-Saharan economies. Daniels emphasized that the liquidity and ability to exit markets are crucial factors for investors, making Kenya a shining beacon due to its liquidity, stable currency, and liquid market. He pointed out that the yields in the Kenyan market have started to come down, with infrastructure bonds moving below 12% for the first time in a while, attracting more investors. One of the key topics of discussion was the interest rate cap introduced in Kenya and its impact on investor sentiment. Daniels noted that there was initial nervousness around the cap, but subsequent statements provided clarity and reassurance to offshore investors. He also mentioned the potential for Eurobond issuances in Kenya and emphasized the importance of channeling funds into infrastructure development to attract offshore investors. The focus on improvements and growth in the region was highlighted as a positive sign for investors. The conversation then shifted to the global announcements made by major central banks, including the Bank of Japan, the Fed, and the South African Reserve Bank. Daniels acknowledged that a potential rate hike in the US could make some investors hold back on investments, but the yields offered by emerging markets, especially in Africa, remain attractive compared to the US. He expressed confidence that investors would continue to seek higher yields in the African space due to political stability and strong market structures. Regarding the commercial banks in Kenya, Daniels mentioned that they have been reliant on government paper for investment but emphasized the need for diversification and innovation in the market. He suggested that banks should explore offshore investment opportunities and diversify their portfolios to protect against currency weaknesses. Daniels also highlighted the recent developments in the East African trade market, allowing for more trading opportunities within the region. Lastly, the discussion touched on the upcoming elections in Uganda, Kenya, and Rwanda. Daniels acknowledged that there might be some apprehension leading up to the elections, but based on past experiences, the markets have handled elections well. He cited the example of Kenya where previous elections were relatively peaceful, with minor disruptions. Daniels expressed confidence that as long as there are no major issues such as street battles, the markets in East Africa are prepared to handle election-related uncertainties. In conclusion, the East African markets continue to provide opportunities for investors seeking higher yields and stable returns. With a focus on infrastructure development, political stability, and market improvements, the region remains an attractive destination for yield seekers and investors looking for growth opportunities.