Markets tread cautiously in long-drawn election court battles

Markets Tuesday traded cautiously with an eye on election petitions against Presidential election filed on Monday, hours before the petition deadline expired.

The shilling held at 103.50/70 to the dollar in a slack-demand trading session. The NSE 20 share index, however, dropped 9.13 points to close at 3788.84 Tuesday.

Analysts said investors were cautious after being caught off-guard when the Supreme Court nullified the August 8 presidential election, sending shock waves across markets.

In the wake of the apex court historic ruling the shilling came under pressure, forcing the central bank to intervene using open market operations and selling greenbacks to support the currency. Over Sh220 billion in paper value was wiped off the Nairobi Securities Exchange (NSE).

“The current fluidity in the political arena could warrant caution as the regulator seeks to allow a self-recovery of the economy as fundamentals adjust to stability before any policy shifts,” Commercial Bank of Africa (CBA) said in a market note.

READ: Eyes on NSE after Safaricom boycott call

The main opposition presidential candidate Raila Odinga who declined to participate in the rerun has since called for a boycott of telco Safaricom for allegedly aiding the rigging of the August 8 General Election.

The telco’s shares, which are the most traded at the NSE, Tuesday trade 50 cents lower at Sh24.50.

“If it (Safaricom) weathers this onslaught I’m seeing it go up in the first quarter of next year when banks start reporting under IFRS 9 rules,” Raymond Kipchumba, an analyst at ABC Capital said.