Market players upbeat despite Westgate terror attack
Security has been beefed-up in Nairobi’s Village Market mall following the terrorist attack at the Westgate Mall. Photo/Jeff Angote
What you need to know:
The NSE 20 Share index was up 17.4 points on Wednesday to close at 4746 points, with equity turnover rising to Sh657 million from Tuesday’s Sh547 million.
Market capitalisation was Sh1.756 trillion from Sh1,746 trillion on Tuesday.
Analysts have cautioned, however, that the stability of the market would not be assured if there were to be recurrent attacks.
Strong fundamentals are expected to help the Kenya debt and equities markets weather the impact of the terrorist attack on Westgate Mall in Nairobi.
The NSE 20 Share index was up 17.4 points on Wednesday to close at 4746 points, with equity turnover rising to Sh657 million from Tuesday’s Sh547 million. Market capitalisation was Sh1.756 trillion from Sh1,746 trillion on Tuesday.
Market players say the bullish run that earlier this year saw the markets survive uncertainties surrounding the General Election and civil unrest in the key Egyptian tea market is likely to hold amid continued investor appetite.
“Foreign investors have increased their bets on the Kenya market since the stock market entered a bull market phase in May 2012. This rising tide of international investment received a shot across its bows but has the wherewithal to move forward and today’s price action is confirmation of that,” said Rich Management MD Aly-Khan Satchu.
He said the slight correction in the shilling and the Nairobi Securities Exchange pointed at resilience and relentless bullish run of the markets.
The NSE 20 share index has only lost marginal ground in the first two trading sessions this week, dropping 12 points on Monday and a further 10 on Tuesday to stand at 4,729 points.
Major counters have, however, been steady since last week, with investors keeping an eye on potential capital and dividend gains.
Foreign interest in the Kenyan markets has gone up considerably this year with investors also thought to be keen on taking longer term positions following the discovery of minerals and energy deposits.
Analysts have cautioned, however, that the stability of the market would not be assured if there were to be recurrent attacks.
KCB on Wednesday moved towards its one year high trading price of Sh47 when it touched a trading high of Sh46.75, while Equity bank was at Sh34, reflecting the expectations that saw investors bet on commercial and bank stocks as likely drivers on the market.
“The two (banking) counters have received strong demand from both local and foreign investors who are taking positions in anticipation of strong full year earnings,” said Sterling Capital research.
Safaricom Limited after two days of mild profit taking saw it drop to Sh8.25 per share made gains on Wednesday to close the day at an improved Sh8.40, again backed by foreign demand.
The shilling which has also remained steady this week made further gains against the dollar, and was quoted at 87.40 by Central Bank in its daily indicative rate, up from 87.46 on Tuesday.
Traders expect the Shilling to be boosted by the sale of CBK’s Sh20 billion 12-year infrastructure bond, as well as lower than usual end of month dollar demand from importers.
The governments Eurobond Issue of approximately $2 billion expected before the end of the year could also be the catalyst for a sharp rally in domestic yields as the government will then be able to constrict supply.
Inflationary risk still remains for the local currency and equities markets with expectations of a spike in inflation due to the enactment of VAT laws, although according to Mr Satchu the effect could be softened because non- VAT factors in inflation have remained low.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
