15 February 2013

Kenya: Capital Markets Ignore Election Jitters, Business Good

TRADE at the Nairobi Securities Exchange is booming, the upcoming election's uncertainities notwithstanding. Official figures show that the market is full of activity unlike the other election years when stock market trade takes a back sit.

For the month ending January this year, all the major indices were on an upward movement in spite of the impending elections.

For instance, the NSE 20 share index, which tracks the performance of 20 leading listed companies, has gone up by nearly seven percent in January compared to December. The index rose to 4417, up from 4133 in December.

On the other hand, the NSE All Share Index has risen by 8.42 per cent in the same period from 95 in December to 103 in January.

Market capitalisation in the period has gone up by 9.1 per cent to stand at Sh1.4 trillion in January, up from Sh1.2 trillion in December. The number of equity transactions have risen by 62 per cent in the period to 32416, up from 20015.

"We hope to continue in that positive trend," said Capital Markets Authority acting chief executive Paul Muthaura during a media training forum.

According to Muthaura, the way the election will be conducted will be a big determinant of how the stock market will continue going forward. however, Muthaura said that the chaos that followed the last election should not be taken to mean that Kenya is a chaotic country.

"We must guard ourselves against the message that we put out," Muthaura challenged the media.

Media Owners Association chairman Kiprono Kittony said the media is taking all the necessary steps to ensure Kenyans are educated as much as possible on the need for peaceful elections. Kittony said the Kenyan media is forecasting a free and fair election because of the independence of the Independent Electoral and Boundaries Commission.

"We are confident that they are up to the task ahead of them," Kittony said.

This year, a number of companies are expected to tap the capital markets for more cash. For instance, Uchumi is aiming to raise more than Sh1 billion from a Rights Issue. KenGen is also eyeing a Rights Issue while logistics company Express Kenya is targeting to raise Sh323 million to help it venture into real estate.

More listings are also expected in the recently launched market for small and medium sized companies."While the elections in March 2013 could pose a major risk to market performance, fundamentals seem to suggest that 2013 should be a good year," Muthaura said.

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