Kenyan stocks hit 25-month high ahead of earnings season

NAIROBI (Reuters) - Kenya's benchmark share index jumped nearly 1 percent to strike a 25-month high on Thursday, extending gains to a seventh session and buoyed by expectation of a strong earnings session that begins next week.

The NSE-20 share index closed at 4,561.16 points, a level last seen Jan 13, 2011, leaving the index up almost 10 percent so far this year.

Kenya's banks in particular are seen posting strong full-year results after inflation and interest rates fell throughout 2012 and the shilling stabilised after a torrid 2011.

Banks including Standard Chartered Bank of Kenya, Equity Bank and Kenya Commercial Bank posted nine-month profit increases of as much as 70 percent.

Standard Chartered led the banks on Thursday, climbing 1.5 percent to 269 shillings, near a 23-month high of 270 shillings. Barclays climbed 0.9 percent to 16.35 shillings, after earlier hitting an intraday high of 16.65.

"There is a lot of appetite from foreign investors. Everything is looking good, economy wise and earnings," said Francis Mwangi a research analyst at Standard Investment Bank.

Equities analysts say that although a presidential election in March is casting a shadow of uncertainty over Kenyan stocks, the bourse, and other frontier markets in the region, remain a good medium-term bet for foreign investors.

The ballot will be the first since political opponents disputed President Mwai Kibaki's re-election in 2007, sparking nationwide violence and badly stunting economic growth.

Kenya's second largest cement manufacturer, ARM rose 6.2 percent to 60 shillings on the back of an anticipated increase in sales after a new factory came online in Tanzania in the second half of 2012.

On the foreign exchange market, the Kenyan shilling held its ground against the dollar as tight shilling liquidity pushed the interbank lending rate higher again.

"The interest rate on the interbank market is edging higher and it's making it expensive to hold dollars," said Ignatius Chicha, head of markets at Citibank.

There was some dollar demand from oil importers, he said.

At close of markets 1300 GMT, commercial banks quoted the shilling at 87.55/75 per dollar, its closing level of the last four sessions.

Charts showed 87.50 as the dollar support level with a break below it opening up 87.00, traders said.

The central bank has been draining shillings from the market on a daily basis and sold dollars in seven separate sessions this year, in a bid to support the local currency and driving the interbank lending rate higher.

The weighted average interbank rate rose for the 16th straight session to 7.8 percent on Wednesday, from 5.4 percent on January 15.

On the primary debt market, the weighted average yield on Kenya's benchmark 91-day Treasury bills rose to 8.229 percent on Thursday from 8.164 percent last week.

Alex Muiruri, a fixed income trader at African Alliance Investment Bank, said short-term yields were rising as investors looked to park their money in shilling denominated assets.

Source: http://news.yahoo.com/kenyan-stocks-hit-25-month-high-ahead-earnings-153656570--business.html

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