Election Vexing Foreigners Makes Kenya Stocks Cheapest on Record

NAIROBI (Capital Markets in Africa) – Investor trepidation seven months from Kenyan general elections has turned the country’s stocks into the worst-performers of 2017, and driven valuations to the weakest on record.

The Nairobi Securities Exchange All-Share Index has fallen 6.9 percent to the lowest since September 2013, the biggest slump among 94 benchmarks tracked by Bloomberg. The looming Aug. 8 vote has prompted concerns of a repeat of violence that marked voting in 2007 and foreign investors, who account for 60 percent of NSE trading, are putting their money elsewhere.

Shares have slumped so far that valuations are at the lowest since 2009, when Bloomberg began compiling the data. Given the retreat in the benchmark index, “longer-term investors may begin to see value and this may result in a slight rise in price levels later in the year,” said Alistair Gould, chief executive officer of Nairobi-based African Alliance Kenya Investment Bank Ltd.

The outlook for stocks has worsened in response to an amendment to the electoral law, allowing the use of manual registration of voters, signed by President Uhuru Kenyatta this week, said Eric Munywoki, head of research at Sterling Investment Bank in Nairobi.

“Investors see this as a sign or anticipation of chaos, because some people will say the elections were unfair,” he said by phone. “For a foreigner looking in, they see no reason to put their money into this economy.”