Kenya’s economy is forecast to expand 6% this year, while inflation eased to 6.8% in February, from 7.8% (MGAfrica)
The country’s stock market index posted best week in three years on a stable growth outlook as rivals falter.
Kenya’s benchmark stock index posted its best weekly gain in three years as an improving growth outlook, slowing inflation and a stable currency lured foreign investors back to East Africa’s biggest economy.
The Nairobi Securities Exchange All Share Index climbed 1.2% to bring its advance this week to 4.1% by the close in Nairobi, the most since the five days ending March 8, 2013, according to data compiled by financial data firm Bloomberg.
Kenya Electricity Generating Co. and Limuru Tea Co. led gains as 40 of the index’s 62 members rose this week.
“Foreigners are coming to take up cheap stocks on the back of a more stable shilling,” Maurice Oduor, investment manager at Cytonn investments, said by phone from Nairobi. Trading volumes jumped 51% from a two-year low last week, according to data from the exchange.
Moody’s Investors Service last month affirmed Kenya’s B1 sovereign rating and maintained its stable outlook, citing “solid” growth and narrowing fiscal and current account deficits. The economy is forecast to expand 6% this year, while inflation eased to 6.8% in February, from 7.8%
That’s helping boost earnings at Kenyan companies, making them attractive relative to stocks in Nigeria, where investors fear a devaluation of the currency, or South Africa, which is in the midst of political turmoil, according to Nairobi-based Rich Management.
Kenya is the top pick for equity investors wanting exposure to East Africa’s fast-growing economies, Christine Phillpott, an analyst at AllianceBernstein LP, said in an interview this week.
“The tide is turning,” Aly Khan Satchu, chief executive at Rich Management, said by phone.
“Kenya will attract more inward flows than peers like Nigeria, where there are concerns about a potential devaluation and South Africa with political concerns about” President Jacob Zuma, he said.
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