Kenyan stocks is world’s worst, set to fall further

by on January 19, 2017

Kenyan stock pric­es at more than three-year lows may have further to fall with domestic investors favour­ing bonds and foreign buyers waiting for low­er valuations, the head of the bourse said.

Shares on the Nairobi Secu­rities Exchange have dropped 6.9 percent since January 1, ex­tending last year’s 8.5 per­cent decline, because of jitters among investors about elec­tions scheduled for August. The yield on Kenya’s bench­mark 10-year bond has fall­en almost 200 basis points to 14.02 percent on Tuesday from a high of 16 percent in February, according to data compiled by Bloomberg.

“Because of issues around volatility in the markets, most pension schemes over the past two years have lost value in their equity holdings so they want to play a bit safer,” NSE Chief Executive Officer Geof­frey Odun­do said in an inter­view Mon­day at his office in the capital. “Interest rates have histori­cally giv­en them a better per­formance so that is why they are will­ing to buy govern­ment pa­per.”

Kenya’s stock exchange is the world’s worst performer so far this year, with the decline dragging valuations to the weakest since 2009, when Bloomberg began compiling the data.

The recent decline may present a buying opportunity for investors, particularly “liq­uid stocks” including Safari­com Ltd., East Africa’s biggest mobile-phone company, and East African Breweries Ltd., the region’s largest brewer, and KCB Group, the No. 1 bank by assets, Exotix Partners said in an e-mailed note on Monday.

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