Kenya shilling steady, stocks fall on foreign selling

By George Obulutsa

NAIROBI (Reuters) - The Kenyan shilling was steady against the dollar on Monday, while shares continued their losing streak, driven by the prospect of an easing of U.S. economic stimulus measures and concerns the government may bring back a capital gains tax.

Nairobi's benchmark NSE-20 Share Index closed down 18.95 points, or 0.4 percent, at 4,579.21 points, the selling driven mostly by foreign investors.

The index fell 8 percent in June.

Among the stocks that closed lower on Monday were mobile phone service operator Safaricom, which ended down 1.5 percent at 6.45 shillings, and Standard Chartered Bank Kenya, which fell 2.4 percent to 280.00 shillings.

Beer maker East African Breweries Ltd. dipped 0.6 percent to 331.00 shillings.

"Generally the market is still on a downward trend," said Ronald Lugalia, an analyst at Afrika Investment Bank. "Foreign investors were net sellers. Generally it's just profit-taking, and there is no significant demand to match up the supply that is coming into the market."

At close of trade at 1300 GMT, commercial banks quoted the shilling at 85.75/95 to the dollar, compared with Friday's close of 85.80/90.

"There was not much demand... I think we will start seeing slight (dollar) demand coming back (in coming days)," said Ignatius Chicha, head of trading at Citibank.

Other traders said there was some possibility that the shilling would strengthen, since most importers had already filled their end-month dollar requirements, curbing demand and taking pressure off the local currency.

"We are still biased towards a slightly stronger shilling as demand for dollars falls," said Nahashon Mungai, a trader at Equity Bank.

Mungai said the 0.3 percent gain recorded by the stock market in Friday's session could signal the end of June's bearish run, pulling in foreign investors who could help boost the shilling.

Government bonds worth a total 350.8 million shillings were traded on the securities exchange, down from 1.87 billion shillings traded on Friday.

Source: http://news.yahoo.com/kenya-shilling-steady-may-lift-foreigners-buying-shares-084055551.html

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