Market Commentary

The first week of October started in a positive fashion with 10 out of the 17 indices under coverage evolving in green territories. The Egyptian index was the outlier marking the strongest performance this week.

NSE ASI gained 1.96% this week. In an interview, Central Bank Governor Njoroge stated that the Kenyan economy was “resilient and diversified” enough to survive any potential negative effects from elections next August. According to the governor, prospects are “very good”. He sees capital projects as the solution to boost output and the economy’s global competitiveness. This interview came as investors become more and more concerned about a possible slowdown in output because of declining private-sector credit growth and the risk of frenzied elections.

One of the main jobs of a Central Bank is price stability, this translated into different actions this weeks in many of the countries under coverage.

It’s a marathon, not a sprint… Investors seem to more and more tend toward a risk-adverse mode following a rally in emerging markets in general over the last three months and given ambiguity over US interest rates. Consensus assumes a 20% probability of the Fed increasing its rates at its meeting next week while the probability of an increase by December stands at 52%. The fact that dollar strengthened versus other currencies after data showing faster-than-expected growth in U.S. consumer inflation promoted the case for the Fed to hike interest rates later this year added to the confusion. Yet, expectations of a Fed rate hike at next week's meeting tempered after US retail and industrial disappointed.