Kenyan Stocks Continue to Decline on Higher Rates, Inflation

Kenyan stocks extended their decline into the fifth day on rising inflation and interest rates.

The Nairobi Stock Exchange’s All Share Index (NSEASI) fell 2.7 percent to 53.70 points as at 2:05 p.m. in the capital, Nairobi. This is the biggest decline since Sept. 26.

The central bank may keep its benchmark interest rate unchanged tomorrow at 16.5 percent after a 10.25 percentage points rise over the last several months helped to reverse a slide in the shilling, according to seven of the 10 economists surveyed by Bloomberg.

Inflation accelerated to 19.72 percent in November from 18.91 percent in October as food and fuel costs increased, adding to the possibility of an interest rate rise this week.

“Nothing is favouring our stock market at the moment from interest rates to inflationary pressures and currency woes,” Alistair Gould, head of trading and business development at Nairobi-based Old Mutual Securities Ltd., said on Bloomberg IB Chat today.

Kenya Power Ltd. (KPLL), the state-run monopoly electricity distributor, Bamburi Cement Ltd. (BMBC), the biggest maker of the building material, and Standard Chartered Bank Ltd. (SCBL) the fourth- largest lender by market value, were among the biggest losing stocks, according to data compiled by Bloomberg.

“Its really disappointing but for any smart and wealthy guy or investor with a bit of risk appetite, there are massive bargains” Gould said. “We are seeing several counters trading way below their book value.”

Foreign investors account for more than 60 percent of the traded Kenyan stocks, he said.

Kenya’s shilling, the world’s best-performing currency this month, gained for a second day against the dollar on expectations that interest rates will remain high after the central bank’s next monetary policy committee meeting tomorrow. The currency of East Africa’s biggest economy advanced 0.2 percent to 89.60 per dollar by 12:56 p.m. in Nairobi, the capital.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net.

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