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Market Commentary

Key Features

Fund Manager

CIC Asset Management Ltd

Launch Date

Jun - 11

Risk Profile

High

Trustee

Kenya Commercial Bank

Custodian

Co-op Custodial Services

Auditors

PWC

Minimum Investment

Ksh 5,000.00

Minimum Additional Investment

Ksh 1,000.00

Initial Fee

2.50%

Annual Management Fee

2.00%

Distribution

Semi-Annual

Who should invest?

Investors who are seeking ;

  • Typically ready to invest over the medium to long-term.
  • Seeking long-term capital growth at high risk.
  • Seek to benefit from a well-diversified portfolio of market instruments.

Asset Allocation

Fund Outlook

Investments in NSE listed stocks provides investors with a diversification option albeit at higher risk. Preference for less riskier assets persisted, but the equity market showed resilient performance as investors centred their activity on select stocks. The fund declined in value during the quarter as a foreing sell off in the month of November led to price declines subsequently affecting returns. The market will continue to move in tandem with performance of select blue chip stocks that constitute its largest share. We expect the market to exhibit weakness in 2022 on concerns around any emergence of new covid variants and political disruption to both public and private investments

GDP
7
Economy Growth
In 2021

The economy averaged 6.9% growth by Q3’21 buoyed largely by re-opening of learning institutions (education sector +64.7%), manufacturing (+9.5%) and accommodation and food services (+24.8%) on eased restrictions after the third wave of covid-19. Kenya’s activity indicators point to a more upbeat pace of recovery in 2022 despite overhang risks. The emergence of vicious cycle of new variants has brought renewed fears globally amid politics taking centre stage as we gear up for elections. Given the impressive degree of recovery across sectors and full reopening of the country effective 20th October 2021, we expect economic growth to exceed the 5.3% forecasted by the government for the 2021/22 fiscal year in the budget review outlook paper.

Inflation
In Q1 '22
5
By Q4 '21
6

Inflation averaged 6% in Q4’21 compared to 6.67% in Q3’21; largely due to regulatory intervention to tame local pump prices. Soaring global energy prices and a potential trigger of food supply shocks pose an upside risk. However, enduring weak demand from household consumption should strap inflation below CBK’s upper target band of 7.5%. This should lessen the likelihood of CBK raising its base rate, at least for the first half of 2022.

Equities
In Q1 '22
NASI
2
Registered Loss
NSE-20
6
Registered Loss

The market registered losses in Q4’21 with the NASI & NSE-20 losing 6.65% and 6.33% respectively. This loss was occasioned by emergence of a new variant that prompted foreign investor capital flight to safer haven assets into other economies they perceive less risky. Local investors continue to cherry pick supply of these and other stocks as optimism around economic recovery picks up.

Exchange Rates
In Q1 '22 The Kes depreciated by


1


The Dollar closing at


114
to the $

The Kes depreciated by 2.34% in Q4’21 to the dollar closing at 113.14 largely attributable to servicing of euro bond debt obligations and a marginal rise in our import bill. We expect the shilling to remain pressured on trade imbalance, higher crude oil prices and a strengthening USD in the global markets. The current FX reserves (5.36 months import cover) provide some cushion to CBK in their efforts to tame the depreciation and we believe the coming year will be one of focus in managing the exchange rate.

Interest Rates
The CBK maintained its benchmark rate at:

7
Interest rate

The CBK retained its benchmark rate at 7% in Q4’21, opining that the current accommodative stance is still needed to provide stimulus. Short-term rates inched up in Q4 with the 91,182 and 364-day papers closing at 7.27%, 8.09% and 9.37% respectively. The yield curve steepened in Q4 with rates rising on all tenors. We expect a rise in yields across the curve as the government seeks to plug the budget deficit. High levels of liquidity in the banking sector as well as local institutions guarantees this borrowing

Fund Performance

Statutory Disclaimer: The value of units may go down as well as up and past performance is not necessarily a guide to the future. There are no guarantee on the client’s capital as the performance of units in the fund is determined by change in the value of underlying investments hence value of your unit trust investment

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