Kenya's stocks snap winning streak

Kenya's shilling and stocks both snapped five-day gaining streaks.

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Kenya's shilling and stocks both snapped five-day gaining streaks on Friday, with the markets spooked the International Criminal Court's (ICC) announcement that it would rule on Monday on Kenya's 2007-08 post-election violence.

At the session's opening, some traders had predicted the ICC proceeding would have little impact on the market, adding that political risk from the case against six high profile Kenyans had already been factored into the shilling's price.

Defying those expectations, the shilling, which had climbed 0.2 percent to an intra-day high of 85.55/75, turned around after the announcement and headed south as importers bought dollars and banks squared off their dollar positions.

“There was some dollar buying by importers and banks squaring off their positions ahead of the weekend, which was largely informed by the ICC announcement,” said Kennedy Butiko, deputy head of Treasury at Bank of Africa.

“We'll see cautious trading when we open next week since no one would like to be exposed.”

The ICC will announce on Jan. 23 whether it has confirmed charges of crimes against humanity levelled against the six, including the finance minister and a former cabinet member.

Banks quoted the shilling 86.00/20 at the market's close, 0.3 percent down on Thursday's closing price.

The central bank, keen not to let the shilling slide out of control as it did last year, returned to the market, mopping up 150 million shillings at a weighted average rate of 17.5 percent. It was the 12th time this month the bank has taken liquidity out through repos.

In stocks, the benchmark NSE-20 Share Index fell 0.6 percent to 3,185.14 points as jittery investors sold on most counters.

“They're expecting a downturn after the ICC ruling,” said Samuel Gichohi, an analyst at NIC Securities.

“We're expecting the markets to be very quiet next week since at these levels we seem to have hit rock bottom,” adding that the worst case scenario would be hitting the 3,000 level.

Stocks shed nearly a third of their value last year with investors rattled by soaring inflation, a battered shilling and the sharp rise in interest rates in the fourth quarter.

An escalation of the euro zone's debt crisis also kept foreign investors at bay.

In fixed income, corporate and government bonds worth 511 million shillings ($6 million) were traded on Friday, up from

the 677 million shillings traded the previous day. - Reuters

Source: http://www.iol.co.za/kenya-s-stocks-snap-winning-streak-1.1217198

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