[2008-08-15]  Don’t give up on shares, say analysts
Stock prices on the Nairobi Stock Exchange (NSE) have hit six-month lows, but analysts see them reversing as the main index approaches a key psychological support level at 4,500 points.

The main NSE 20-share index closed at 4,565.88 points on Wednesday, its lowest this year since it reached 4,576.31 points on January 29, at the height of post-election violence.

“The psychological support level for this market in the last two years has been 4,500 points. It is bottoming out and we shall start seeing an upside trend in the next two weeks,” said Mr Maurice Opiyo, an economic analyst at Old Mutual Asset Managers.

Analysts say a weakening shilling and concerns about the delayed investigation into a scandal over the sale of Grand Regency Hotel have dampened sentiment.

The share price of the bourse’s biggest company and most recent entrant, mobile phone firm Safaricom, has also weighed on the index, falling briefly to 4.95 shillings on Tuesday, five cents below the offer price.

“The concern that a lot of people have about Safaricom is that with the increase in food and energy prices, it means less disposable income for consumers and that will affect it in the near term, but the longer term potential is still very bright,” said Mr Richard Segal, Africa strategist at Renaissance Capital.

SAFARICOM SHARES

Kenya’s inflation hit 31.5 per cent in May on food and fuel prices, but retraced to 26.5 per cent last month. The Central Bank expects it to fall in coming months.

The Safaricom issue in June was heavily subscribed and its performance after listing at the NSE was sterling for weeks. But it has been disappointing for most investors since then.

Source: East Standard