29 November 2017

Kenya: Pensions Raise Stockholding as Nairobi Bourse Recovers

Pension schemes invested more in equities by cutting back on other investment classes in the third quarter as the stock markets rallied despite political intrigues.

A survey of 372 schemes by consulting firm Zamara Group (formerly Alexander Forbes Financial Services EA) shows pension providers raised equity allocations to 23.9 per cent in the three months to September, up from 21.5 per cent in the previous quarter.

It showed fixed income still had the largest share of investment by pension funds at 70.8 per cent down from 72.9 per cent in the previous quarter, while properties and offshore investments were 3.9 per cent and 1.4 per cent respectively.

The Nairobi Stock Exchange (NSE) #ticker:NSE has rallied 20 per cent so far this year lifted by telecoms giant Safaricom and banking stocks, shrugging off jitters from a prolonged electioneering that threatened to turn ugly after the August 8 Presidential election was nullified.

A Supreme Court ruling that upheld President Uhuru Kenyatta's win in last month's rerun vote lifted a cloud of uncertainty that had sent investors, mostly foreigners, scampering out of the market.

The NSE shed as much as Sh22 billion in capitalisation in two days after the Supreme Court annulled the election on September 1.

Recouped losses

It recouped losses as bargain hunters took advantage of the discounted share prices to buy low.

"Following the Supreme Court ruling upholding results of the repeat presidential elections we have seen stocks such as Safaricom #ticker:SCOM touch historic highs and this tide has lifted the entire market," said Zamara group chief executive officer Sundeep Raichura.

Safaricom's valuation of Sh1.1 trillion accounts for nearly half of the bourse capitalisation and is the most liquid counter at the exchange, which makes it a darling of foreign investors.

The telcos' shares have rallied 42.9 per cent this year to Sh27.50 a share, more than double the average market performance, as investors attracted by its rising profitability and innovative products accumulate them in their portfolio.

Banking stocks

Banking stocks have also recovered from a drop in value even as lenders in the country grappled with the effects of a year-old interest rate caps law that hurt their main revenue source, the margins on loans.

Anticipation is rife among investors that the rate capping law will be repealed once the electioneering is over.

President Kenyatta was sworn in for a second and final term on Tuesday, meaning he may no longer need to pursue populist agenda.


Nation Journalists Feted at Merck Foundation Media Awards

NTV's Namukabo Werungah, Doreen Magak, Antony Wabwoba and former station head Pamela Asigi were among the big winners at… Read more »

See What Everyone is Watching

Copyright © 2017 The Nation. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.