POLITICAL UNCERTAINTY COSTS INVESTORS ON NAIROBI BOURSE 30 BLN SHILLINGS

NAIROBI, Investors at the Nairobi Securities Exchange (NSA) have lost close to 30 billion shillings (about 290 million US dollars) over the past week as political uncertainty ruined market sentiments.

The banking sector also witnessed reduced activities as the inter-bank rate fell for the third straight week to 8.01 per cent on Friday from 8.13 per cent a week earlier, according to a Central Bank of Kenya (CBK) weekly report which stated that the bond market was also hit by the raging political fight.

It has been two months of heightened political activities, with running battles between demonstrators and police officers becoming the order of the day. Kenya held its general election on Aug 8 with the election of the president, members of parliament, county Governors and members of County Assemblies but the result of the president poll was annulled by the Supreme Court following a petition by the main opposition coalition, the national Super Alliance (NASA).

The Court ordered a fresh presidential election on Oct 26 between the two main contenders, incumbent President Uhuru Kenyatta and NASA presidential candidate Raila Odinga, who now says he will boycott the fresh polls unless his demands for reforms at the Independent Electoral and Boundaries Commission (IEBC) are met.

The securities market which is the economic barometer of the nation reflects all these uncertainties. In the week ended Oct 12, investors at the NSE saw their investments tanking, with close to 28 billion shillings wiped out from the market.

The three indices — the NSE 20, NASI and NSE 25 lost 2.2 per cent, 1.8 per cent and 0.9 per cent of their values respectively. Investors in the banking sector lost the most with the biggest declines being KCB Group, Barclays Bank of Kenya and Equity Group, as their share prices shed 7.5 per cent, 6.4 per cent and 2.7 per cent, respectively.

The central bank weekly market report says the volume of bonds traded fell by 80 perc ent in the week ended Oct 12, with 267 deals transacted compared with 283 deals in the previous week.

The government was forced to intervene to stabilize the market with the Central Bank’s Reverse Repo Purchases and the government spending of 30.6 billion shillings. Government payments amounted to 30.4 billion shillings while tax payments amounted to 24.4 billion shillings.

Demand for Treasury Bills was also weak with demand standing at 10.26 billion shillings against 24 billion shillings that was on offer by the central bank. ‘

he forex market has, however, held steady with the Kenya Shilling exchange rate closing the week on a stable note against the American dollar at 103.25 against the greenback. The shilling strengthened against the Sterling Pound and the Euro at 135.6 and 121.41 respectively.

Source: NAM NEWS NETWORK