Kenyan Stocks Close Higher on Repeal of Interest Rate Cut Optimism

Nairobi Securities Market’s Momentum Still Negative, Its 3rd Week

Image I Courtesy NSE

Kenyan stocks ended higher on Friday after President Uhuru Kenyatta declined to assent to the Finance Bill 2019 in an attempt to repeal the interest rate cap.

During the week, the equities market exhibited an upward trend with NASI, NSE 20 and NSE 25 gaining by 0.5%, 0.2% and 1.5%, respectively.

The performance in NASI was driven by gains recorded by stocks in the Banking sector with NIC Group, I&M Holdings, Equity Group and KCB Group recording gains of 10.2%, 6.3%, 5.3% and 3.5%, respectively.

Equities turnover increased by 157.1% during the week to USD 34.4 mn, from USD 13.4 mn the previous week, taking the YTD turnover to USD 1,132.0 mn. 

Foreign investors remained net sellers for the week, with a net selling position of USD 8.5 mn, from a net selling position of USD 0.4 mn the previous week.

Market analysts remain positive as they expect increased market activity, and possibly increased inflows from foreign investors, as they take advantage of the attractive valuations, to support the positive performance.

“While it is uncertain whether Parliament will garner the two-thirds majority necessary to overturn the law, the uncertainty may keep investors on the sidelines,
as they await Parliament’s response to the changes proposed by the President,” Said Stepanie Kimani, from NCBA Group. “A complete repeal of the law is expected to underpin recovery in private sector lending, which may exert some pressure on the available liquidity.”