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Economy

NSE halts slide as shilling gains

Nairobi Securities Exchange
The Nairobi Securities Exchange. FILE PHOTO | NMG 

The Nairobi Securities Exchange (NSE) gained Sh12.1 billion in investor wealth Thursday while the shilling strengthened to the dollar, halting the coronavirus-led slide of the past one week a day after the state announced a stimulus package for the economy.

The gains, mostly from a select blue chips, lifted market capitalisation to Sh1.91 trillion on the day the demand for shares also rose. This is Sh49 billion up from Sh1.959 on Monday when the NSE 20 index touched 17-year low.

Safaricom #ticker:SCOM, Equity #ticker:EQTY, Absa #ticker:ABSA and KenGen #ticker:KEGN all posted gains Thursday while several banking stocks held steady. This helped the NSE 20 index to gain 17.8 points to close at 1,891.3 points.

Genghis Capital equities analyst Patrick Mumu said investors were reacting to the stimulus package issued by the state and the possible slowdown in new cases of coronavirus infection on enforcement of a curfew.

“Investors see the stimulus programme and the morning to evening curfew helping to pump some stability in the economy and cut on new cases of the virus,” said Mr Mumu.

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“For investors, the curfew and discovery of just three new infections as opposed to nine on Sunday indicated to them that government is containing the situation. This could be a key anchor for prices going forward.”

Kenya had 31 confirmed cases by Thursday ahead of 5am to 7pm curfew that sets in Friday.

The shilling also recovered from Tuesday’s four and half year low of 106.54 units to the dollar to exchange at 105.50 in afternoon interbank trading, the best in the last five days.

The strengthening was linked to the stimulus package and partly due to receding dollar demand from retailers and manufacturers due to slowing economic activity.

"They (traders) have been importing mostly from china but there is little to import with this slow down," news agency Reuters said, quoting a senior foreign exchange trader from a commercial bank.

President Uhuru Kenyatta on Wednesday exempted workers earning up to Sh24,000 from paying income tax and lowered corporate tax for businesses from 30 percent to 25 percent while sparing the economy from total lockdown.

Kenya is also seeking Sh122.5 billion ($1.15 billion) emergency funding from the International Monetary Fund and the World Bank to support the slowing economy.

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