KenGen drives Kenyan shares higher, shilling steady
14 October 2014, 09:35
Nairobi - A seven percent surge in KenGen lifted Kenyan shares on Monday as the country's main electricity producer added more geothermal power to the national grid, while the shilling currency held steady.
The benchmark NSE-20 share index rose 0.6 percent or 30.81 points, to close at 5,311.27.
Silha Rasugu, a research analyst at Ghengis Capital, said state-owned KenGen had added 210 megawatts of geothermal power to the national grid. The grid's existing generation capacity stood at about 1,664MW, with geothermal energy accounting for 158MW.
"That's quite a significant improvement," Rasugu said, noting that investors were trading on anticipated good news. Kenya wants to add 5,000 MW to the national grid by 2017.
KenGen, which is expected to release its earnings results this week, rose 6.9 percent to close at 12.40 shillings.
However, Rasugu said the capacity boost which took place in July and September would not appear in this year's financial results because the 2014 financial year ended in June.
Kenya's main index was also boosted by a rebound in British American Investments (Britam) shares. The investment group's stock declined about 8 percent both on Thursday and Friday last week but jumped 9 percent on Monday to close at 30 shillings.
Britam's shares took a tumble last week when the investment firm lost a bid to be the lead transaction advisers to Acorn Group in multi-billion shilling real estate projects.
However, analysts say Britam's stock is trading on a speculative basis and point out that the company, which owns a 25 percent stake in the real estate firm, will still profit from that investment when Acorn's real estate projects are completed.
On the foreign exchange market, the shilling closed at 89.15/89.25 to the dollar, slightly weaker than Friday's close of 89.10/89.20 but in a tight range of 89.00 to 89.30.
Traders said demand for dollars slowed mid-month but was expected to pick up later in October as importers and manufacturers start paying their monthly import bills.
Edwin Mathenge, Head of Treasury at Chase Bank, said the shilling rose early on Monday due to "excess liquidity" and Kenya's central bank sought to mop up 15 billion shillings($168.26 million).
The bank regularly uses repurchase agreements (repo) and term auction deposits to manage liquidity in the market, lending support to the shilling by making it slightly more expensive for banks to hold dollars.