EFG Hermes Kenya Macroeconomic Analytics June 2023

Kenya is at its lowest valuation ever amid the improving macro environment
The Kenyan market is down 23% YTD (31% in USD terms). Much of this is due to the lower valuation of Safaricom, but even the market ex-Safaricom is cheap (3.3x 12m Fwd P/E). Market liquidity is poor(3 million average daily trading volume (ADTV) of just USD3.5 million), but the macro outlook is improving.

IMF review and Eurobond rally show light at the end of the tunnel
On May 23, 2023, the fifth review of the current IMF programme for Kenya highlighted a favourable medium-term outlook and announced an extension and additional funding.

Kenya Shilling T-Bill rates are high
Yields on 12-month Kenya Shilling T-bills are up year-to-date (YTD) and at their highest level since 2018; real 12-month yields are 3.5%. FY24 fiscal measures are a risk to this disinflationary trend.