Expectations of higher earnings lift bourse activity

By Jackson Okoth

The sheer optimism in the release of half-year financial results by most listed firms has continued to buoy the Nairobi bourse.

Not only are most of these firms showing good returns but prospects for strong growth in 2013 is pushing up activity at the bourse.

“The earnings period has only been interrupted by a weakening shilling which is unfavourable to foreign investors who want to exit the market,” said John Kirimi, Managing Director-Sterling Investment Bank.

Foreigners participating at the Nairobi Securities Exchange (NSE) invest in local currency but have to convert into hard currency when taking out profits.

Exchange loss

 A weakening shilling implies that foreign investors make an exchange loss when they exit. “How foreigners react to the index will only be clearer after the reporting season is over,” said Kirimi.

 After a dip experienced in mid-June, the benchmark NSE 20 was up 1.84 per cent to settle at 4807.53 points buoyed by the foreign investor appetite in the large cap counters KCB, Equity and Safaricom.

The NSE All Share Index closed at 123.70 points supported by the resurgence of KenGen and the banking sector with expectations of strong earnings.  A commentary by Sterling Capital Ltd said anticipation of better earnings will drive the market this week with expectations from banks and insurance companies.  The growth in revenues in the first half from mortgage lender Housing Finance is an indication of what to expect from the lenders.

 In the Commercials, national air carrier Kenya Airways is the most closely watched especially after the Government announced its intention to impose a levy on jet fuel. On the list of companies that have announced their six months financial results include Housing Finance.

It posted a 586 per cent net profit of Sh397.1 million from Sh250.4 million a year earlier on the back of cheap deposits that saw interest expense ease.

Oil marketer Kenol has also agreed to pay the disputed Sh1.2 billion it owes Kenya Petroleum Refineries in three installments.

According to a statement, the move will see it earn a ticket back to the Open Tender system (OTS) and refinery, the two main channels for procuring fuel.