NSE shares fall to seven-week low, shilling flat
30 August 2013, 10:36
Nairobi - Kenyan shares fell to a seven-week low on Thursday as investors booked more profits and turned to higher returns in the debt market, while the shilling was barely changed.
The benchmark NSE-20 share index fell for the fourth straight session, sliding 0.7 percent to 4,708.05 points.
"The half-year earnings were driving the market up, but now that they are behind us, demand for stocks has fallen," said Ronald Lugalia, an analyst at Afrika Investment Bank.
"There is also a slight shift towards bills and bonds."
Yields on Kenyan debt rose steadily for eight straight weeks due to tight shilling supply in the market, but started falling at auctions last week amid strong demand.
East African Breweries (EABL), the second-most capitalised stock on the bourse, tumbled 5 percent to 286 shillings. Its shares have slipped from the 360 shilling-mark in July when the company issued a profit warning.
Equity Bank, the country's largest bank by customers, fell 1.5 percent to 32.75 shillings a share.
In the foreign exchange market, the shilling was posted at 87.55/75 per dollar at 0958 GMT, a fraction weaker than Wednesday's close of 87.50/70.
Traders said the market was looking to a monetary policy meeting on Tuesday for direction.
"End-month demand (for dollars) is over now. Everyone is looking to see what the Monetary Policy Committee will say. From there we can have a clear perspective," said Robert Gatobu, a trader at Bank of Africa.
A Reuters survey of 16 economists taken over the past week forecast Kenyan interest rates would stay on hold until at least the end of this year to counter rising inflation and pressure on the currency.
Kenya held its benchmark lending rate at 8.50 percent in July, with the central bank saying it wanted to allow more time for earlier cuts to filter through the economy.
In the debt market, the yield on 91-day Treasury bills inched up to 10.474 percent at a heavily subscribed sale.
Debt worth 1.4 billion shillings was traded in the secondary market, down from 2.5 billion on Wednesday.