Kenya - Shares Rise To A 14 Month High, Shilling Stable

Kenyan shares rose 1.1 percent to a 14-month high on Tuesday with investors chasing higher returns in the equity market as yields on government securities fall, while the shilling was stable.

Foreign buying of Kenyan blue chips drove the benchmark NSE-20 Share index up to 3,903.72 points, a level last seen on July 7th, 2011. Year to date, the main index has gained 22 percent.

"It's the right time to move into the stock market," said Wycliffe Masinde, head of research at Dyer & Blair.

"We have seen a big shift from government papers to equities. There are higher returns in the equity market."

Safaricom, the leading mobile operator, rose 4.9 percent to a 17-month high of 4.25 shillings, Thomson Reuters data showed, buoyed by its plans to invest $95 million in its own fibre-optic cable.

Analysts say this will reduce its cost of operation.

Equity Bank climbed by 3.4 percent to 23 shillings on expectations that this month's rate cut will boost its loan growth book, Masinde said.

At the last auction, which was undersubscribed, yields on the benchmark 3-month Treasury bill fell to 7.81 percent from 8.12 percent a week earlier. They hit a 2012 high of 20.8 percent in January.

KenolKobil said on Tuesday that Switzerland-based Puma Energy would continue with due diligence ahead of a proposed takeover deal, despite the oil marketing firm swinging to a heavy loss in the first six months of 2012.

The shilling ended at 84.05/15 per dollar, barely changed from Monday's close of 84.10/30.

During the session, the central bank mopped up liquidity worth 6 billion shillings via repurchase agreements at an average rate of 8.376 percent.

"There are a lot of dollar orders lined up at 84, so if we break that level, we could see the shilling weaken," said Robert Gatobu, a trader at Bank of Africa.

In the debt market, 6.19 billion shillings worth of government and corporate bonds were traded up from 4.43 billion shillings.

News Source: Reuters