The NSE 20 Share index which measures the performance of 20 blue chip companies listed on the exchange is expected to breach the 5000 point mark and possibly reach highs of 5300 points. Pundits have put varying estimate based on a number of factors. Next year’s GDP forecast ranges between 5.3%-6.0% which will bode well for the bourse. This year the country returned to robust rates of expansion registering 4.5% and 5.2% growth in Q1:10 and Q2:10 respectively. The NSE 20 index has registered performance in line with GDP growth: it has grown by over 30% year to date.
Both local and foreign investor confidence is sure to be boosted by the adoption of a new constitution and a B+ rating by Standard & Poor after being upgraded by one step. Investor participation in the market is further facilitated by the introduction of online trading platforms by stock brokerage firms looking to take advantage of the growing international interest. This is likely to increase flows to the NSE especially from the international investors.
The Nairobi Stock Exchange (NSE) intends to loosen the stringent listing requirements that have seen small companies locked out of the capital markets. It is planning to create a Small and Medium Enterprises (SMEs) market segment by mid next year. This sector contributes about 20% of the country’s GDP and employs nearly 20% of the population.
On the downside, the predicted La Nina weather pattern – which is expected to affect the agricultural sector the most – is likely to put downward pressure on 2011 GDP growth. This is because agriculture contributes about 25% to Kenya’s GDP. It may also increase manufacturing and production costs as electricity is likely to be more expensive as the country resorts to thermal production as opposed to hydro.
Negative factor: The atmosphere can only be blown off balance by the politicians as they jostle for 2012 succession politics. However, this should not worry businessmen/investors as the populous get more wise.
Warm regards
Symon Muchina Thuo
End of the iceberg
Jambo bwana na dada, habari gani? Mzuri sana…….
sailor 