Kenya Stocks Slide 1st Day in 5 as Police Seek to End Mall SiegeEric Ombok
Kenyan stocks dropped for the first time in five days and the shilling retreated against the dollar as security forces battled to rescue hostages taken in the East African nation’s deadliest terrorist attack since 1998.
The FTSE NSE 25 Index slid 0.2 percent, the most since Aug. 30, to close at 164.28 in Nairobi. The shilling weakened 0.2 percent to 87.50 per dollar, depreciating for the first time in three days.
Safaricom Ltd., Kenya’s biggest company by market value, dropped from a record high, while Centum Investment Co., the nation’s largest publicly traded investment group, slid as much as 9.1 percent. Sustained heavy gunfire was heard at the Westgate Mall, where police have cornered as many as 15 al-Qaeda-linked gunmen holding an unknown number of hostages for a third day. At least 69 people have been killed in the raid, according to the Kenya Red Cross, the worst attack since 213 people died in the bombing of the U.S. Embassy.
“Investors are generally staying away rather than pulling out,” said Eric Munywoi, a research analyst at Nairobi-based Old Securities Ltd., said in a phone interview. “Investor confidence will not be affected in the long-term if the hostage stand-off ends quickly,” which is likely to happen because “Kenya has a lot of support from several countries,” he said.
Dozens of soldiers and an army tank were seen moving around the mall access road, after at least two explosions. Authorities have “rescued a few more civilians held inside the mall but a few still remain,” according to an e-mailed statement from Interior Secretary Joseph Ole Lenku.
World leaders and United Nations Secretary-General Ban Ki-moon have condemned the attacks and offered to help. President Barack Obama reiterated U.S. support to bring the attackers to justice, according to a statement from the White House.
The shilling recorded its strongest week in two months in the five days before the attack, advancing 0.3 percent to 87.35 per dollar, the most since July 19.
“The shilling has proven to be remarkably resilient,” Aly-Khan Satchu, chief executive officer of Rich Management Ltd., a Nairobi-based adviser to companies and high net-worth individuals, said in an e-mailed response to questions. “Its fortunes depend entirely on whether Westgate is a one-time event or represents a new and more dangerous normal.”
Kenya plans to raise from $1.5 billion to $2 billion in a debut Eurobond offering by December to fund construction of road, rail and energy projects that will spur the economy. Treasury Secretary Henry Rotich said lead managers and advisers for the sale would be announced this week.
“I don’t think there will be a significant impact on the Eurobond because from the look of things the attack is a one-off event which could happen in any country,” Habil Olaka, chief executive officer of the Kenya Bankers Association, said in an interview today in Nairobi. “The pricing has not been set and I don’t see a political risk premium being added to it.”
Safaricom retreated 1.8 percent to 8.35 shillings. Centum slid 6.4 percent to 25.75 shillings, down from the highest since January 2007.