Related News:
Kenyan Stocks Rise to a 23-Month High Head of Referendum on Constitution
Kenya’s benchmark stock index rose to its highest level in 23 months, and posted its ninth monthly rise in 10 on expectations that voters will approve a new constitution that may promote stability in East Africa’s biggest economy.
The 55-member Nairobi Stock Exchange All Share Index climbed 1 percent today to close at 77.4 as of 3 p.m. in the capital, the highest since Sept. 5, 2008, extending the gain in July to 4 percent.
“The index is reacting to the referendum,” James Mose, a research analyst at Nairobi-based CFC Stanbic Financial Services Ltd., said in an interview. “The new draft is good for business and I expect the market to rally after the referendum.”
Kenyans will vote in favor of a new constitution in an Aug. 4 referendum by a 68-to-25 margin, according to a public opinion survey released today by TNS Research International, with 95 percent of registered voters saying they will vote, said Geoffrey Kimani, research director at TNS. The poll found that 3 percent of citizens won’t vote.
Gainers include TPS Eastern Africa Ltd., the parent of the Serena hotel chain in the region, which surged 25 percent in the month. British American Tobacco Kenya Ltd. rallied 16 percent to the highest since Jan. 12, 2007 and Housing Finance Co. Ltd., the country’s only listed mortgage company, advanced 13 percent to 23.75 shillings, a more than 22-month high.
The draft constitution aims to limit presidential powers, make land distribution more equitable and ease ethnic divisions that sparked post-election violence in 2008, killing an estimated 1,500 people.
Resources
The draft constitution is good for business because all appointees of the president will be vetted by parliament, Mose said.
TPS received regulatory approval on July 22 to sell more shares. The proceeds will be used to fund expansion.
British American Tobacco Plc’s Kenyan unit said on July 23 that half-year profit climbed 19 percent to 1.02 billion shillings ($12.7 million) as sales rose.
Housing Finance said on July 21 first-half net income surged 54 percent and that it expects to increase lending to meet growing demand.
Kenya’s central bank unexpectedly cut its benchmark interest rate by 0.75 of a percentage point to 6 percent on July 28, the sixth reduction since 2009, to help spur economic growth and boost the expansion. The rate is now at its lowest level since it was introduced on June 2, 2006.
Falling Rates
Demand for the country’s 91-day Treasury bills exceeded supply at a sale yesterday, reducing the yield to the lowest in at least four years following the cut in the interest rate.
“The reduction of central bank rate and the fall of Treasury bill rates at yesterday’s auction is a signal the market is expecting interest rates to fall further,” Renaldo D’souza, an analyst at Nairobi’s Genghis Capital Ltd., said in an interview.
To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net; Ana Monteiro in Johannesburg at amonteiro4@bloomberg.net
Rate These Stories
Rate this Page