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| The NSE is showing signs of a good run in 2010 compared to last year |
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OTHER FINANCIAL NEWS |
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Despite the deficit of shares being seen on most counters at the Nairobi Stock Exchange, both local and foreign investor participation has been evident, but with the foreigners dominating trading, accounting for 66 per cent of total turnover.
Safaricom share price continues to rise on the back of continued demand from foreigners, creating a deficit of shares on some recent days. The counter closed at an average price of Kshs5.10 on Monday. Other counters that have seen strong foreign demand are Co-operative Bank and Kinden. Local investors remained bullish on Mummies Sugar, pushing the price up to Ksh7.60 from Ksh7.10. Speculation on the counter continues to remain high by individual retail investors.
The Nairobi Stock Exchange is showing signs of a good run in 2010 compared to last year’s muted performance. CFC Stanbic Financial Services analysts say the NSE is expected to reap from economic recovery. A knock-on effect from the 2010 FIFA World Cup, as well as a slowdown on shocks experienced by the economy compared to the last two years should also boost the market, they say.
“We are optimistic that the equities on the NSE will deliver positive returns this year,” said the analysts. In 2009, the market suffered lack of investor confidence and the ripple effects of the global economic downturn that saw foreigner exit and dwindling of remittances from the Diaspora, some of which ends up in stocks.
Other positive indicators analysts are banking on include increased interests from foreign investors and reduced perceived political risks this year but the referendum on a new constitution ad prosecution on post-election violence suspects may cause some tremors.
In the first week of trading, the NSE shored up its performance, closing at 3,304 points, a 1.7 per cent rise from its December 2009. According to statistics, local investor participation was 68 per cent compared to that of foreign investors, which accounted for only 32 per cent of the total trade during the week.
“While we are not saying that it’s going to be an easy walk, several sectors appear to have positives going for them at least, based on broad trends,” the analysis adds. Within the sectors, beverage and tobacco companies could benefit from additional revenues from foreign markets. But this could also be dampened by high input costs in the industry.
Media and publishing counters are also expected to have a better run from the declining prices of newsprint, as well as a possibility of companies increasing their advertising spend on an improved economy. Stocks in travel and leisure, information communication and technology (ICT) are also expected to reap from the World Cup tournament in South Africa, as well as the landing of the fiber optic cable.
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