Kenyan shares hit 20-month high on Q3 earnings bet

NAIROBI (Reuters) - Kenyan shares hit a 20-month high on Thursday, propelled by gains in blue chip firms that investors bet will post strong third quarter results. The shilling finished the day unchanged against the dollar.

The main NSE-20 Share Index rose 0.6 percent to close at 4,119.50 points, a level last seen in early March 2011.

The index has rallied 27.8 percent this year, making it one of Africa's best performers this year as the bourse recovers from a slump in 2011. Shares have been boosted by investors returning from a slowing debt market and by interest rate cuts as inflation falls steadily.

Kenya Airways, one of Africa's leading airlines, rose 2.9 percent to 12.40 shillings buoyed by expectations that it will benefit from the exit of British-based Virgin Atlantic Airways and Bahrain's Gulf Air from the Kenyan market.

Telecoms operator Safaricom added 2.4 percent to close at 4.35 shillings a share - a 21-month high - as investors forecast first half results would be up on last year.

"Safaricom have managed to grow their revenue despite falling market share because of the pricing and product diversity. Investors are reading this positively," said Ronald Lugalia, an analyst at Afrika Investment Bank.

Safaricom's results for the first half ended September are expected in the next two weeks.

In the currency market, commercial banks quoted the shilling at 85.00/20 per dollar at the close of the market, barely changed from Wednesday's close of 85.02/25.

"We may see the shilling tick up (weaken) a bit if importers come to buy dollars. But ordinary flows will not turn the tide," said Christopher Muiga, a senior trader at Kenya Commercial Bank.

Traders expect importers to step up dollar buying to meet end-month obligations early next week.

The shilling has been fairly stable this year, supported by the central bank's tight monetary policy, under which it has regularly mopped up liquidity via repurchase agreements (repos).

The banks mopped up 12.45 billion shillings from the market on Thursday, after it received 12.95 billion shillings for the 10 billion it had offered in repos.

"The central bank has been ... playing its cards very well," said Robert Gatobu, a trader at Bank of Africa.

In the debt market, the weighted average yield on the benchmark 91-day Treasury bills rose to 9.945 percent at the auction, from 9.437 percent last week.

Government and corporate bonds worth 3.5 billion shillings were traded, down from 3.9 billion shillings on Wednesday.

Source: http://news.yahoo.com/kenyan-shares-hit-20-month-high-q3-earnings-151505736--finance.html

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