Bourse records slight rise in trading

Trading at the Nairobi Stock Exchange increased on Tuesday but remained below last week’s levels as investors continued to shy away from the market.

The benchmark NSE-20 share index, which tracks the performance of blue chip firms, closed trading 39.41 points down at 4, 626.41 on reduced demand, notably from foreign investors.

The thin trading shows that investors are still uncertain of the direction of the bourse after last week’s referendum vote even as stockbrokers termed the lull “temporary.”

The number of shares traded increased to 25.9 million from 15 million on Monday but the volume was still lower than the 51 million traded last Tuesday before the vote.

Daily turnover stood at Sh454 million compared to Sh250 million on Monday but still lower than the Sh765.8 million last Tuesday, leaving stockbrokers with reduced commissions as investors stayed away.

According to Alistair Gould of Standard Investment Bank, the situation is temporary and the NSE is expected to pick up in tandem with investor confidence following the passing of the new constitution in a peaceful and transparent manner

The bourse has been witnessing reduced activity from foreign investors, a trend that started in May on uncertainty over the outcome of the referendum.

In the currency market, the Kenyan shilling slightly lost ground against the dollar yesterday but dealers said that they were expecting appreciation in coming days, although they warned of some consolidation.

Commercial banks traded the shilling at Sh79.40/60 per dollar from Monday’s 79.30/40.

The shilling crossed over the benchmark Sh80.00 level against the dollar and stocks at the NSE index closed a new high for 2010 on Thursday, despite thin trading.

“We will likely consolidate a bit but the bias is for a stronger shilling, boosted by low political risk and a positive economic outlook globally,” Mr Moses Kiboi, the head of trading at Citi Bank said.

On the NSE, Stock brokers are betting on the peaceful adoption of the new Constitution to help boost foreign investor and institutional participation, feeding the market with demand to lift sluggish trading.

Jan van der Does de Willebois, the head of equities at Dyer and Blair Investment Bank had earlier said that Africa always presents a higher risk investment destination but the peaceful adoption of the new Constitution is however injecting confidence back into the Kenyan stock market.

The share of foreign investors’ participation has declined from 72 per cent in January to 24 per cent last month, according to NSE data.

Their reduced participation has been tied to uncertainty over the referendum and profit-taking after appreciation of the undervalued shares they bought on the low in the first quarter.