Kenya’s financial markets opened the week on a solid footing as investors showed rare confidence ahead of Tuesday’s looming political standoff associated with the planned swearing in of opposition leaders.
The shilling maintained its recent gains against the dollar, while the stock market was also up as a majority of stocks closed higher.
Nasa leader Raila Odinga and his deputy, Kalonzo Musyoka, plan to be sworn in as the “peoples’ president and deputy” Tuesday at a public function that the police has declared illegal, setting the stage for a possible confrontation with security forces.
Such confrontations have in the past had a negative effect on financial markets, pulling down the stock market and weakening the shilling as jittery investors adopt a wait-and-see stance.
On Monday, however, the shilling strengthened against the dollar. Commercial banks quoted the Kenyan currency at 102.30 to the dollar on average, compared to Friday’s closing rate of 102.35.
Traders said the shilling was supported by inflows from foreign investors, including those looking to participate in a possible tap sale of the Sh40 billion infrastructure bond.
Other foreign portfolio investors, who had kept off in the second half of last year due to the elections, are also making their way back into the market.
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The dollar inflow into the market is reflected in the Central Bank of Kenya’s official foreign currency reserves, which rose by $62 million (Sh6.3 billion) last week to stand at $7.056 billion.
The NSE’s benchmark NSE 20 share index rose 11.5 points yesterday to close at 3739 points, even as traded volumes dropped compared to last Friday.
Market capitalisation stood at Sh2.668 trillion compared to Friday’s Sh2.676 trillion, with the slight fall attributed mainly to Safaricom’s #ticker:SCOM retreat from its all-time high of Sh30 to Sh29.75.
Reduced trading activity on the telecoms operator’s share was also responsible for the fall in the day’s turnover to Sh287 million from Sh1 billion on Friday. Safaricom traded just 3.9 million shares yesterday, compared to 26.1 million shares on Friday.
Eyes will, however, remain on the market today to see whether the recent surge will continue, especially should there be disruptions within the city.
International investors also took a sanguine view yesterday, with the yields on Kenya’s Eurobond remaining flat on the day.
Reuters data showed that the yield on the five-year tranche that matures next year was unchanged at 3.62 per cent, while that on the 10-year paper stood at 5.76 per cent, compared to 5.75 per cent on Friday.