Stocks fall during political rally, shilling flat
08 July 2014, 09:01
Nairobi - Kenyan shares lost 0.3 percent on Tuesday as investors stayed on the sidelines waiting to see the outcome of a major political rally that caused tensions in east Africa's biggest economy, while the shilling was flat.
Opposition leader Raila Odinga called for a mass rally in Nairobi to highlight a host of grievances including a slowing economy and a spate of militant attacks. Although police hurled tear gas at some protestors earlier in the day, the rally was largely calm by the time markets closed.
On the Nairobi Securities Exchange, the main NSE-20 Share Index fell 16.90 points to close at 4,868.81 points.
Ronald Lugalia, a research analyst at AIB Capital, said some investors had adopted a 'wait-and-see' attitude, preferring to stay out of the market until the rally is over and political risk subsides.
"The investors want to see the outcome of the rally before they continue (investing)," Lugalia said.
Attacks by Somali Islamist group al Shabaab have dented the vital tourism industry and put Kenya on the edge.
Investors have been watching for any signs of political unrest, which in Kenya often happens in tandem with ethnic-based violence. The 2007/2008 post election violence saw about 1,200 people killed and the economy crippled.
At the 1300 GMT close of trade, commercial banks quoted the shilling at 87.85/95 to the dollar amid thin volumes, unchanged from Friday's close.
Duncan Kinuthia, head of trading at Commercial Bank of Africa, said most traders had either stayed out of the market or only traded in the first half of the day.
"We’ve seen very muted corporate activity," said Kinuthia, adding that if there is no escalation in political rhetoric then the local currency should stay in a tight range between 87.50-88 shillings to the dollar.
On the secondary debt market, government bonds valued at 551 million shillings were traded, compared with Friday's 1.69 billion shillings.