Kenyan Stocks Retreat Second Day on Speculation Gains Overdone

Kenyan shares dropped for a second day amid speculation that a rally that made the nation’s stock index the world’s second-best performer this year is overdone.

The Nairobi Securities Exchange All-Share Index retreated 0.8 percent to 120.45 points by the 3 p.m. close in the capital, Nairobi, according to e-mailed data provided by the bourse. The gauge slid 0.2 percent yesterday, after closing at a record high on April 2.

“Based on price to earnings ratio, most stocks are overvalued and we expect a correction,” said Faith Atiti, a research analyst at Nairobi-based NIC Securities Ltd.

The index gained 12 percent since the March 4 presidential election, boosting its year-to-date climb to 27 percent, according to data compiled by Bloomberg, bettered only by the Ghana Stock Exchange Composite Index.

Uhuru Kenyatta, the son of Kenya’s first president, Jomo Kenyatta, took 50.07 percent of ballots cast on March 4, enough to avoid a runoff. Outgoing Prime Minister Raila Odinga, whose father was the elder Kenyatta’s vice president, got 43.3 percent and challenged the election at the Supreme Court, which on March 30 upheld the outcome of the poll.

Among the top laggards in trading today were Pan Africa Insurance Holdings Ltd., the Kenyan unit of South African insurer Sanlam Ltd., which slid 7.8 percent, and Centum Investments Co., the largest publicly traded investment group, which dropped 6.1 percent. AccessKenya Ltd., the best performing Kenyan stock this year, lost 3.7 percent today.

“There are some stocks which are overvalued, not the entire market,” Eric Musau, a research analyst at Nairobi-based Standard Investment Bank Ltd. said in a phone interview.

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