Money Markets
Oil stocks fare badly in 2009 despite projections
KenolKobil and Total Kenya who have a combined market share of 44 per cent posted negative end of year returns of 24.24 per cent and 7.03 per cent respectively, defying earlier projections that had stated that stocks from the two firms would continue their resilient growth. File
Posted Thursday, January 14 2010 at 18:07
A stronger shilling means that it is cheaper for importers since they will use less shillings to buy a unit of oil while a weaker shilling will mean more shillings needed for a unit of oil.
But the movement of the shilling is difficult to tell according to currency dealers. “The political situation, growth of both the global and international markets and the yields,” says Mwambu Malamba, a senior forex dealer at Commercial Bank of Africa.
Mr Malamba says that the shilling will likely oscillate between Sh74 and Sh77 in the coming months.
Demand for the commodity is set to rise as the Kenyan economy grows. The International Monetary Fund had earlier set projections of the country’s economic growth at 3.5 per cent in 2010.
But Mr Nderi says that a tough regulatory framework may make it difficult for the two firms to benefit from an increase in prices.
“The Energy Regulatory Commission (ERC) has powers to control prices and this makes it hard for companies to adjust their prices accordingly,” says Mr Nderi.
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