Kenyan Stocks Decline for Second Day as Mall Siege Nears End

Kenyan shares declined for the second day as the country’s security forces battled to end a three-day siege by Islamist militants of an upscale mall in the capital, Nairobi, that has left 62 people dead.

The FTSE NSE Kenya 25 Index fell less than 0.1 percent to 164.24 by the close, bringing the two-day drop to 0.3 percent. The volume of shares traded on the Nairobi Securities Exchange halved to about 14 million yesterday from the previous session, as investors awaited the outcome to the crisis.

Kenyan security forces killed at least six gunmen and freed an unknown number of hostages after fighting as many as 15 Islamist militants who attacked the mall on Sept. 21. Al-Shabaab, a Somalia-based militia that is affiliated with al-Qaeda, claimed responsibility for the raid, which is the worst attack in Kenya since the U.S. Embassy bombings in August 1998 that killed 213 people.

Local investors are “reading the national mood,” Ted Macharia, an analyst at Nairobi-based AIB Capital Ltd., said in an e-mailed note before the market open. “The gloomy story from yesterday seems to be clearing,” he later said by phone.

The shilling gained 0.1 percent to 87.5 against the dollar after yesterday weakening the most in more than a month. The crisis is an “isolated event” that should not hurt the economy, Kenya Treasury Secretary Henry Rotich said by phone from Nairobi today.

‘Cautious’ Trading

Police and army troops occupy every level of the building and security forces are at the “tail-end” of the operation to end the siege, Interior Secretary Joseph Ole Lenku said yesterday. Three soldiers were killed in the mall operation, according to the defense forces.

Investors are being “cautious,” Joshua Anene, a trader at Nairobi-based Commercial Bank of Africa Ltd., said by phone. The shilling may be boosted by the central bank’s sale of as much as 20 billion shillings ($229 million) of 12-year infrastructure bonds that ends today, he said. Kenya last auctioned the infrastructure bonds in February 2012, when 11.6 billion shillings were sold at 16.64 percent, according to the bank.

The Kenya central bank will also offer 3 billion shillings each of 182- and 364-day Treasury bills tomorrow. The yield on 364-day notes fell to 10.413 percent on Sept. 18 from 10.756 percent a week earlier, while the yield for the 182-day securities fell to 9.694 percent from 10.089 percent over the same period.

Before it's here, it's on the Bloomberg Terminal.