Investment updates Quarter 3 2016
2015 Economic growth - The Kenya economy is estimated to have expanded by 6.2% during the second quarter of 2016 compared to 5.9% during the same quarter in 2015. This growth was mainly supported by good performance in agriculture, forestry & fishing, transportation, real estate, and wholesale & retail trade sectors.
Inflation - Kenya inflation rates for the quarter was 6.33% compared to 5.36% in Q2 2016. Rising food prices outweighed consumer gains from falling fuel prices. However, the rate was still within the CBK’s target range of 2.5% to 7.5%.
Interest rates - The Central Bank of Kenya reduced the Central Bank Rate (CBR) from 10.5% to 10.0% during its last meeting in September 2016 to further spur private sector credit growth. There was relative stability in the interest rates for the short term securities issued by the Government of Kenya.
Foreign Exchange - The Kenya shilling remained relatively stable during the quarter particularly against the dollar on the back of a strengthening dollar worldwide against other currencies. This stellar performance could be attributed to CBK’s interventions in the market during the period, to curb any pressures on the local currency.
Capitl markets – The NASI and NSE 20 declined by 3% and 11% respectively for the quarter. The poor performance was driven primarily by the slump in banking stocks following the enactment of the new Banking Act in late August 2016. On a year-to-date basis the NASI and the NSE 20 share index were down 6.1% and 19.7% respectively.
In the third quarter of 2016 the Fund registered an impressive return on investment of 2.1% against a target of 1.5%. The annualized performance of the Fund for the period ending 30th September was 15% which outperformed the industry average performance which stood at 9.1%.
Over a five year period ending 30th September 2016 the Fund registered an annualized performance of 14.0% which was above the target (inflation +2%) by 4.34%.
The growth of the fund value is as shown below;
The Kenya’s economy is projected to grow at 5.9% in 2016. According to the World Bank’s Kenya Economic Report 2016, this growth projection is pegged on the stability of the macroeconomic environment, improved security as well as structural reforms that enhance the business environment in the various sectors of the economy.