By Jevans Nyabiage
Markets are expected to witness a cautious trading this week as the International Criminal Court (ICC) makes the much anticipated ruling.
The ruling will be made against six high profile Kenyans for their alleged role in spurring violence after a disputed presidential election in 2007.
The ICC judges are set to either confirm or reject charges of crimes against humanity levelled against the six, including Finance Minister, Uhuru Kenyatta and former Cabinet member, William Ruto.
The outcome of the ruling is expected to shape the local political scene as Kenya prepares to go into elections either this year or early next year.
Uhuru and Ruto have already announced their interest to run for the country’s top seat.
The two suspects being key in Kenya’s political agenda, whichever way the ICC delivers its verdict, will have an impact on the performance of markets.
Analysts say the markets will be anticipating a downturn after the ICC ruling. Like in all election years, foreign and local investors normally flee the Nairobi Securities Exchange (NSE) waiting for a new administration to come in.
Shilling falls
When on Friday the ICC confirmed that it would make the ruling on Monday the shilling got a beating defying a five-day gaining trend, heading south as importers bought dollars. The shilling had climbed 0.2 per cent to an intra-day high of Sh85.55/75.
Analysts, however, predicted that ICC announcement would not have a major impact on the market since the political risk from the case had already been factored into the shilling’s price and the stock market valuation.
"The ICC factor may not be clearly discernible, but is likely already priced in," said Einstein Kihanda, the Chief Investment Officer at ICEA Asset Management.
The stock market’s performance has continued to be lacklustre, due to the current domestic economic outlook — high interest rates, high inflation although now on the decline.
"I think the ICC has been a game changer, putting politicians on notice that the era of impunity is over. It is this which I believe has changed behaviour," said Aly Khan Satchu, Nairobi-based Investment analyst.
"Most of the NSE downside is baked into the price. None of the potential good news is baked in; therefore, I see a rally of about 25 to 35 per cent in the stock market through this year. Of course, if we see a repeat of 2007, all bets are off."
The NSE-20 share index fell 0.6 per cent to 3,185.14 points as some investors sold on most counters.
The continued uncertainty in the global financial markets has also had a spill over effect on the local market.
On Friday, banks quoted the shilling Sh86.00/20 at the market’s close, 0.3 per cent down on Thursday’s closing price.
The Central Bank of Kenya was in the market and mopped Sh150 million at a weighted average rate of 17.5 per cent. It was the 12th time this month the bank has taken liquidity out through repos.
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