NSE undaunted by Hague ruling

January 24, 2012
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The Nairobi Securities Exchange/FILE

, NAIROBI, Kenya, Jan 24 – The Nairobi Securities Exchange (NSE) Experts has expressed confidence that the indictment of four Kenyans by the International Criminal Court (ICC) will not have any major impact on the financial markets.

NSE second vice-chairman Job Kihumba argued that the fact that the stock market and the shilling were stable on Monday even after the ICC outcome is a pointer that the economic activities were not and will not be negatively impacted.

“We did not see much change in the stock market. In fact, the same trends we have seen throughout the month of January persisted; very small drops; small gains more or less the market remaining flat,” Kihumba said.

From January 2 to 23, the NSE 20 Share Index has lost just one percent, he emphasised.

In the ruling that was delivered to a nation that had collectively held its breath, the ICC declared that Deputy Prime Minister and Minister for Finance Uhuru Kenyatta, former Higher Education and Agriculture Minister William Ruto, Head of Civil Service Francis Muthaura and radio journalist Joshua arap Sang would face trial for crimes committed after the 2007 general election.

An analyst who spoke on condition of anonymity however held a contrary view, saying some foreign investors might adopt a ‘cautious’ approach. The analyst however reckoned that the verdict has forever changed the country’s political landscape for the better, a situation that might reflect positively on the markets.

Although there was some ‘restraint’ ahead of the decision by the ICC, the index dipped 0.42 percent in Monday’s trading to close at 3, 171.63 points.

Foreign investor activity accounted for 54.46 percent of total NSE activity, although this represented a decline from 61.36 percent at the close of last Friday’s trading session.

The shilling on the other hand was quoted at Sh86.00/30 to the dollar against the Sh86.00/20 posted at the close of Friday last week.

Kihumba felt that the market had already ‘internalised’ the announcement and factored it in.

He credited this to the call for calm by the suspects and even the government, which he said was commendable.

“The market had already taken all these things into consideration way back and adjusted accordingly,” he asserted.

Investors, he said, were more concerned about other issues such as the interest rates regime which have immediate impact on the market’s performance than the ICC process.

On fears that international agencies such as the International Monetary Fund might withhold donor funding, since the Finance Minister is one of the accused persons, Kihumba forecast that there would be no major changes in how these organisations deal with Kenya.

“The court said this (the ruling) was not a declaration of guilt or innocence that these people are just entering the first real phase of being put before a court to defend themselves. That says volumes and obviously and people have to live their lives,” he added.

And while risks still abound especially the uncertainty over when the next general election will be held, the NSE official opined that the markets would not be adversely affected.

Already, there is renewed interest from both local and foreign investors buoyed by fundamentals such as the stability in macroeconomic environment, easing inflation and interest rates and declining oil prices.

“In the long run, Kenyans will learn that politicians come and go; leadership changes with time and whether someone comes from your area or not is irrelevant,” he argued.

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