Analysts Warn Investors of Inflation and Global Market Volatilities

Analysts have warned that geopolitics, elevated inflations and global market volatilities will have a huge bearing on investment decisions in Kenya.

Amidst the backdrop of global volatilities, however, the experts from ICEA LION Asset Management reckon investors have opportunities to generate strong returns by tapping in the equities market and income space.

Richard Murithii, the Senior Portfolio Manager ICEA LION Asset Management said interest rates on the domestic treasuries are at a six-year high, providing fixed income investors with a window to recoup their invested capital at a quicker rate with low additional risk.

He said Kenya’s banking sector also bears promise with some listed banks on track to double their profits in the next four years.

“For offshore investors, current yields on some Kenyan Eurobonds indicate that returns of 30 per cent in US dollar terms can be achieved in less than two years,” said Murithii.

Kenyan investors should also not lose sight of opportunities arising from emerging global trends including de-globalisation, decarbonisation, digitization and decentralization, rising trends he said may also contain huge opportunities.

“Despite the clouds hovering over markets currently, investors should not lose sight of silver linings that may be contained therein,” said Einstein Kihanda the ICEA LION Asset Management chief executive.

Kihanda said the war in the Baltic, pitting Ukraine and Russia may be long drawn out thereby extending the global uncertainty levels that have risen for most of this year.

Inflation has hit multi-decade highs in the developed world and sub-Saharan Africa, with global oil refining capacity likely to continue to be strained by growing oil consumption worldwide, hence maintaining upward pressure on fuel prices.

“Investors today are faced with difficult challenges and are advised to act prudently. We don’t expect fair weather ahead,” Muriithi said during a media briefing on the company’s 4th quarter market outlook.