Shilling falls, NSE trading halts briefly after Supreme Court annuls Uhuru's election

FILE PHOTO | NMG 

By CONSTANT MUNDA


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Summary

• Trading at the Nairobi Securities Exchange
• was temporarily halted because of panicky transactions, especially by foreign investors.
• The Supreme Court, in a majority decision, ordered fresh presidential elections in 60 days as per the country’s constitution, citing “irregularities and illegalities” in the electoral process which started with polls on August 8.
• Markets had reacted positively to the re-election of Mr Kenyatta, rallying to a 23-month high.

The Kenya shilling fell by as much as 0.32 per cent within an hour after the highest court nullified the re-election of President Uhuru Kenyatta.

Trading at the Nairobi Securities Exchange was temporarily halted because of panicky transactions, especially by foreign investors.

"In line with NSE trading rules, we halted trading from 12.30 to 1.00 p.m. as NSE 20 Share Index performance decreased by over 5 per cent," the NSE said on its official Twitter handle.

The Supreme Court, in a majority decision, ordered fresh presidential elections in 60 days as per the country’s constitution, citing “irregularities and illegalities” in the electoral process which started with polls on August 8.

The shilling, which had opened trade at an average of 102.81 units against the dollar, according to the Central Bank of Kenya’s data, depreciated and was exchanging at 103.14 at around 12.52 pm.

Bond fell

The $2 billion sovereign bond maturing 2024 fell 1.25 US cents to 103.5 cents, according to Tradeweb data, its lowest since mid-August.

The 2019 issue fell 0.75 cents to $102.75 cents, Reuters reported.

“Markets hate uncertainty and clearly the Supreme Court’s decision has injected an unprecedented amount of uncertainty into the equation.

"The markets have a clear preference for the largely free market economics of President Kenyatta and hence the sharp and precipitous drop,” Aly-Khan Satchu, the chief executive of Rich Management, an investment advisory firm, said via mail.

Resumed

Trade on the Nairobi bourse, however, resumed a few minutes after 1 p.m.

Markets had reacted positively to the re-election of Mr Kenyatta, rallying to a 23-month high.

“The real economy was already on the ropes, this decision is a punch into the solar plexus.

"We have another 60 days where we will be trying to catch our breath,” Mr Satchu added.