The financial markets Tuesday braved the heightened political noise between the Jubilee and Nasa coalitions over the new presidential election date, with investor wealth rising at the stock market and the shilling showing stability against the dollar.
Market capitalisation at the Nairobi Securities Exchange (NSE) was up by Sh23 billion to Sh2.372 trillion Tuesday, reversing some of the losses recorded by investors in the previous two trading sessions on Monday and Friday last week.
The shilling was exchanging at an average of 103.27 as per commercial bank quotes Tuesday, unchanged from the closing price recorded on Monday.
“What we saw on Friday at the stock market was panic selling before people even considered the implication of the Supreme Court ruling. We are now seeing normal trading coming back,” said NIC Securities research head Timothy Wambu.
“Voting again is not necessarily a bad thing. We have gained some international mileage as a result of the ruling and the continuing peace, and this will only go up if we have a smooth transition out of the election period.”
The stability in the markets on Tuesday was in defiance of the standoff between the main political parties on the new election date of October 17 and the conditions to be met before the poll.
Jubilee and Nasa are at loggerheads over the list of demands issued by the opposition, which has threatened to boycott the new election on October 17, risking polarising the country further at a time when businesses are already showing signs of fatigue from the months of high octane politics.
The NSE had lost a total of Sh130 billion on Friday and Monday, attributed to panic selling by some investors after the nullification of the Presidential poll by the Supreme Court.
Foreign investors had led in selling off large counters such as Safaricom #ticker:SCOM, Equity Bank #ticker:EQTY, KCB #ticker:KCB, EABL #ticker:EABL and Bamburi #ticker:BAMB, dragging down share prices and in tandem the market capitalisation and main indices.
On Tuesday Safaricom, which is the largest listed firm by market value at the NSE, reversed some of the losses by gaining 75 cents to close the day at Sh24.75 per share.
Also on the gainers’ list were the bank stocks of KCB, Cooperative Bank #ticker:COOP, Standard Chartered #ticker:SCBK and Barclays. Equity Bank #ticker:BBK however continued to slide, shedding Sh1.25 a share to close the day at Sh38.75.
The financial markets thrive on stability, especially currencies which are affected heavily by disruptions in the economy and trade.
The shilling gained after the initial election result announcement last month, strengthening below the 103 level for the first time in months.
Friday’s reversal of the Presidential poll result saw it weaken by an average of 45 cents to 103.30, as people rushed to stock up on dollars.
Analysts are however warning that if prolonged, the political uncertainty will damage business confidence and eventually the growth of the economy.
Ratings agency Moody’s said Tuesday in a commentary on Kenya that the decision is a negative on Kenya’s credit, since it delays the crafting of policies to address the country’s main credit challenges, particularly the large fiscal deficit which requires consolidation.
“The clarity of the outcome will inevitably influence the authority of Kenya’s political and policy-making institutions, and the credibility of policy,” said Moody’s in the note.