(Bloomberg) -- Kenya’s equity market is set to attract more interest from investors after rebounding from the fall triggered by recent political upheaval, according to the head of the country’s stock exchange.
The country’s All Share Index rose again in September, following three months of decline fueled by deadly protests over the cost-of-living crisis. The stock market is up 17% this year, delivering 42% return in dollar terms due to an appreciating shilling, data compiled by Bloomberg shows.
Apart from the calmer political situation, the equity market may benefit from increasing transparency with easier access to information about corporate actions, according to Frank Mwiti, chief executive officer of the Nairobi Securities Exchange.
“We are seeing our listed companies providing more market data and investor briefings so that investors are much more aware now,” Mwiti said in a recent interview. “There is actually more information now for people to trade on.”
Interest-rate cuts in the US may also boost inflows into Kenya’s stocks, Mwiti added, saying the market is already registering “an uptick in foreign institutional investors.”
The current rebound underscores a reversal in investors’ perception, which turned sour when President William Ruto’s administration was forced to scrap the planned $2.7 billion of tax measures designed to shore up the budget. After that, Fitch Ratings, S&P Global Ratings and Moody’s Ratings all downgraded the nation’s credit score deeper into the junk territory.
Since then, Bloomberg reported that Kenya was in talks for a $1.5 billion loan from Abu Dhabi, helping to allay some fears over the East African nation’s fiscal strength. The cash from the oil-rich emirate is expected to boost Kenya’s foreign-currency reserves and further buttress the shilling, already one the world’s best-performing currencies against the dollar this year.
Positive signals are also coming from businesses, which posted a series of “very strong” corporate earnings for the first half of the year, said Maina Wacieni, the chief investment officer at African Alliance Kenya Asset Management.
“This is especially the case in the banking sector,” Wacieni said.
KCB Group Plc, Kenya’s biggest bank, posted an 87% profit increase in the first half of the year and said it will resume paying an interim dividend. Standard Chartered Bank Kenya Ltd. reported a 49% net income growth from the same period of last year.
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