This research report was prepared by the Research Department of Old Mutual Securities Limited. Old Mutual Securities Limited is a securities trading company licensed by the Capital Markets Authority (Kenya) for the purpose of facilitating trade on the Nairobi Securities Exchange.

Here are our views on the news making headlines today for Kenya:
Investors are exiting the Nairobi Securities Exchange (NSE) for the higher yielding Nigerian bourse, piling more pressure on the weak Kenyan shilling, a research firm says. Data from StratLink Africa shows that shares sold by foreign investors were worth Sh3.3 billion more than what they bought in the last two months. The outflow of money from the market underlines the investors’ search for better returns.

Our View: The expected Fed’s hike on interest rates seems to be leading to global asset reallocation and reclassification which has led to the underperformance of the Kenyan bourse (NSE 20 -0.94% ytd) as well as the weakening of the Kenyan shilling to KES 95.43 levels against the dollar. Most of the key fundamental indicators on the currency augur negatively pointing further weakening of the shilling. However, Kenya signed a USD 64m stand-by credit agreement with the IMF in Feb-15 which could be advanced to improve our current account position and hence give support to the ailing currency. 
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