Kenyan shares extend rally ahead of earnings season

NAIROBI (Reuters) - Kenyan shares rose for the fifth straight session on Tuesday as investors bet on strong results when the company earnings season kicks off next week, while the shilling slipped.

The benchmark share index ticked up 0.7 percent to 4,483.62 points. The index is up 7.7 percent so far this year, extending last year's 29 percent gain.

"Last year was a good year for most firms as the shilling stabilised, inflation fell and interest rates came down. Investors expect good results," said Faith Atiti, an analyst at NIC Securities.

Shares in Kenya's second-biggest cement maker ARM jumped 5.7 percent to 55.50 shillings each, as it recovered from a slide after a share split in December. The five-for-one split was aimed at making its shares affordable for retail investors.

In the foreign exchange market, the shilling closed at 87.55/75 against the dollar, slightly weaker than Monday's close of 87.55/65.

"There are weak dollar inflows, with demand for dollars from importers outweighing it. Exporters are also not willing to sell (dollars)," said a trader at one commercial bank.

The shilling has fallen 1.6 percent against the dollar so far this year as importers stockpile the greenback ahead of presidential and parliamentary elections in March. Commercial bank have also built up long dollar positions in anticipation of further shilling weakness, traders said.

The general election is "still a factor in the market and everyone is playing safe," the trader said.

The ballot is the first since a hotly contested poll in 2007 unleashed a wave of ethnic violence that sent east Africa's biggest economy into a tailspin.

Traders said they expected the central bank would keep draining shillings from the market to tighten liquidity and support the shilling. Tight money market liquidity has seen the average interbank lending rate rise for 14 consecutive sessions. It hit 7.7 percent on Monday.

"I don't think they (the central bank) will let it fall beyond 88 (to the dollar)," said Christopher Muiga, a senior trader at Kenya Commercial Bank.

In the debt market, government and corporate bonds worth 2.2 billion shillings were traded, up from 850.5 million shillings on Monday.

Source: http://news.yahoo.com/kenyan-shares-extend-rally-ahead-earnings-season-145847732--business.html

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