African markets

Kenyan stock market wins 32 billion shillings amid tight presidential race

The stock market reopened after the general election recess on Wednesday with a gain of 31.8 billion shillings, with preliminary results showing a close race between opposition leader Raila Odinga and vice president William Ruto.

Twenty-four of 63 listed stocks posted gains on Wednesday while seven counters lost value as local investors continued to take stocks at low prices.

That pushed the market value to 2.261 trillion shillings, the highest valuation since mid-May, when shares began to tumble as foreign investors fled after interest rates spiked in the markets. developed such as the United States.

Analysts believe investors had factored in the political risks associated with the general election.

Tuesday’s elections were a major test for stability in Kenya after two of the last three elections were marred by violence following disputes amid allegations of rigging.

The Kenyan shilling, however, continued to depreciate against the dollar, trading at an average of 119.27 shillings in the afternoon after opening at 119.17 shillings.

Trading activity at the Nairobi Securities Exchange (NSE) fell from Monday, with the number of shares traded falling 44% to 10.5 million.

Bond trading was flat after registering a turnover of 3.63 billion shillings compared to 3.67 billion shillings on Monday.

“We believe that the electoral aspect is a factor but not a key consideration when participating in the NSE, as evidenced by the market recovery since late June,” said Solomon Kariuki, head of research at AIB-AXYS Africa.

“Investors have already priced in election risks, which have also been overshadowed by global factors.”

This year, investors had already factored in major shocks into their view of the market long before the election period, including the Russian-Ukrainian war which drove foreign investors out of frontier markets.

Rate hikes in Western markets battling high inflation were also a factor in foreign investor inflows, meaning that by the time the polls came in, the NSE was decidedly a buyers’ market.

Favorites Dr Ruto and Mr Odinga were neck and neck based on the results compiled by the media.

The Independent Elections and Boundaries Commission (IEBC) said it estimated around 65% of the 22.1 million registered voters had voted.

Turnout was almost 80% in the last elections in 2017. The final result from the IEBC is expected in a few days, although legally it is up to a week.

Over the past four trading sessions, the NSE has added 80.5 billion shillings in market capitalization, the measure of investor wealth.

The five largest stocks on the exchange contributed 86% or 69.03 billion shillings of these gains, which is proportional to their overall share of investor wealth at the NSE.

Safaricom, the country’s largest listed company, gained 34 billion shillings between August 3 and yesterday after its share price rose 3% in the period to 30.45 shillings.

Equity Group, the second listed company, recorded a 12% price gain during the period to 53.25 shillings, leading to an increase in market capitalization from 21.7 billion shillings to 200.9 billion. shillings.

cooperative bank, KCB and EABL increased their market capitalization by 5.6 billion shillings, 5.1 billion shillings and 2.6 billion shillings respectively during the period.

These companies have posted strong earnings and declared regular dividends over the past few years, making them attractive options for investors looking to retain the value of their portfolios during declining markets.

The poll jitter challenge mirrors the market position it held in 2017 when the NSE gained 73 billion shillings in the two weeks before the disputed polls led to the cancellation of the presidential results.

In the currency market, there was a steady depreciation of the shilling as demand for dollars from importers crushed supply.

The cost of imports has risen dramatically over the past year due to pent-up demand after economies reopened after Covid-19 shutdowns, while the Russian-Ukrainian war raised the price of fuel and fuel. food.

The drop to a new all-time low of 119.27 units on Wednesday brings this year’s cumulative depreciation against the dollar to 5.14%.

Going forward, the performance of the markets will depend on the post-election situation in the country once the winner of the presidential poll is officially announced in the coming days.

While the 2013 election results were passed without incident despite a Supreme Court petition, there was widespread unrest in 2017 after a similar dispute resulted in the cancellation of the presidential election results and the Nasa opposition coalition boycotted the new poll.

The cancellation of the presidential poll on September 1, 2017 by the Supreme Court shocked the market, causing prices to fall past the 10% daily limit and halt trading for half an hour.

On that day, the market lost 92 billion shillings of investor wealth and 3.5% of its benchmark NSE 20 index, indicating the potential shocks the NSE would face in a volatile post-election situation.