Kenyan shares rise on H1 earnings bet, shilling steady

Kenyan shares rose on Wednesday, with investors betting that many companies will post solid first-half results thanks to a strengthening economy after the peaceful elections in March.

The Kenyan shilling was steady against the dollar, though traders said it was vulnerable after the central bank warned that instability in Egypt was a risk to Kenya's economy.

Egypt is the biggest buyer of Kenyan tea exports, the African country's biggest foreign exchange earner.

Egypt stayed away from this week's tea auction because of the unrest.

On the Nairobi Securities Exchange's benchmark NSE-20 share index climbed 0.9 per cent to 4,640.50 points.

"Stocks continue to recover on higher support, largely on results-driven speculation," NIC Securities analyst Faith Atiti said. "Banks are expected to start announcing their results from the middle of this month."

Shares in cement maker ARM rose 3.8 per cent to 67.50 shillings after it reported a 28 per cent increase in its first-half pre-tax profit.

Kenya Commercial Bank, the country's largest bank by assets, led the buoyant banking shares higher, rising 1.3 per cent to Sh40.25 per share.

The Kenyan economy expanded by an annualised rate of 5.2 per cent in the first quarter, from 3.9 per cent in the same period last year, helped by a buoyant agricultural sector. The peaceful vote was in contrast to the violence that marred the previous vote five years ago.

In the foreign exchange market, the shilling was posted at 85.85/87.05 per dollar at the 1300 GMT market close, barely changed from Tuesday's close of 86.80/87.00.

The central bank left its key lending rate unchanged at 8.50 per cent on Tuesday and said the unrest in Egypt could have knock on effects, including on the price of oil and on tea earnings.

Traders cited the situation in Egypt as a factor that could weaken the shilling further. It has dropped by 1.2 per cent against the dollar since July 3, in line with other risky assets, on expectations that the US Federal Reserve will start to unwind its monetary stimulus.

The weighted average yield on six-month Treasury bills rose to 6.32 per cent, while the one-year paper held steady at 8.356 per cent at an undersubscribed sale.
In the secondary debt market, bonds worth Sh2.5 billion ($28.8 million) were traded, up from 2.4 billion shillings exchanged on Tuesday.