Al Shabaab and election jitters threaten NSE’s outlook

By James Anyanzwa

The Nairobi Securities Exchange (NSE) is worried about its performance in the next six months due to the rising threats of Al Shabaab terror groups and the changing political environment ahead of the next general elections.

Chief Executive Peter Mwangi noted that while the first half of this year has been encouraging, the issue of security — which affects foreign investments in the country — is still a major challenge to the bourse.

“This year is not a bad year but it is tough year,” Mwangi told a media briefing last week,” adding that, “ We are happy the market recovered strongly in the first half of this year, but the only issues which we do not support out positive outlook is Al-Shabaab and elections.”

The entry into Somalia of Kenya’s Defence Forces has drawn reprisal terror attacks by Al-Shabaab, negatively impacting on the perception of Kenya as a secure tourism destination.

According to NSE‘s annual report (2011), the bourse’s net profit grew 8.1 per cent to Sh85.6 million from Sh79.2 million in the previous year (2010). Total income advanced 6.2 per cent to Sh338.9 million from Sh319.1 million helped by alternative revenue sources such as data vending and sales of publications.

But Mwangi pointed out that a decline in trading activities would hurt the market’s turnover this year. NSE rebounded during the last six months (January-June), buoyed by increased participation by foreign investors. But analysts maintain a cautiously optimistic view about the market’s growth prospects for the full-year.