The Kenyan stock market is set for a 30 percent plunge this year as drought drove inflation, hurting consumer spending and corporate profits in east Africa’s biggest economy.
The Nairobi Stock Exchange’s All Share Index (NSEASI) rose 0.4 percent to 54.48 points as of 12:35 p.m. in Nairobi, the biggest gain in three days. A close at this level will make the index the second-worst performing in Africa this year, according to data compiled by Bloomberg. Egypt fell the most, down 49 percent.
“Investors worries during the year boiled down to macro fundamentals because if you look at companies fundamentals they are pretty intact,” George Bodo, an equity strategist at Nairobi-based Apex Africa Capital Ltd., said by phone today.
East African growth has been hit by an acceleration in inflation amid a drought that curtailed new investment by businesses and eroded consumer spending power, Secretary General Richard Sezibera said in an interview in Bujumbura, the Burundian capital, on Dec. 1. Inflation slowed (KNPRIYY) to 18.9 percent in December, the first decline in 13 months, according to data from the Kenya National Bureau of Statistics.
The shilling depreciated to a record intraday low of 106.75 on Oct. 11, weakening 26 percent. The central bank stabilized the currency with measures such as raising the key lending rate to a record 18 percent. The shilling, up 0.1 percent today, is headed for a 5.2 percent fall this year.
Gainers and Losers
Only six of 55 stocks in the benchmark rose on an year-to- date (NSEASI) basis, four of them being tea companies. City Trust Ltd. (CTRL), jumped 94 percent, Williamson Tea Kenya Ltd. (GWKL), surging 53 percent, and Kapchorua Tea Co. (KPTC), catapulting 25 percent, led the gainers.
“The top stocks are peripheral companies, the shilling came to their aid,” Bodo said. “They earned more because of the weaker shilling but their core business is dependent on rain which was not very good this year.”
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