Kenyan stocks rally for third straight day, shilling steady

By George Obulutsa NAIROBI (Reuters) - Financial and telecoms stocks led Kenya's main share index higher for a third consecutive day of gains on Friday. The shilling held steady against the dollar. The Nairobi Securities Exchange's benchmark NSE-20 Share Index rose by 36.19 points, or 0.74 percent, to close at 4,942.28 points. Telecom service provider Safaricom, Equity Bank and investment firm Centum Investments gained the most. Equity continued to rise after reporting a 21 percent rise in first-half pretax profit. It closed up 1.1 percent at 45.75 shillings a share. Safaricom, which received approval to roll out a 14.9 billion shilling ($170 million) security and surveillance system project and its 4G service, rose 2 percent to 12.45 shillings. "Those numbers could have helped the stocks gain interest on the part of investors," said Eric Musau, research analyst at Standard Investment Bank, referring to Equity bank's results. He said there was renewed interest by investors in Safaricom, because of the security contract and 4G service. Centum Investments' shares rose after it announced plans to acquire another 66 percent of the local K-Rep Bank. Its shares rose 1.6 percent to 47.75 shillings. "They're purchasing a controlling stake in K-Rep ... and I think investors were cheering on the news," Musau said. On the currency market, the shilling closed at 87.80/90 to the dollar, unchanged for Thursday. Traders said tight supply of shillings was offsetting dollar demand from oil and telecommunications companies. In a sign of tightening liquidity in the money markets, the weighted average interbank lending rate rose to 10.0951 percent on Thursday from 9.5093 percent the previous day, and from 8.7059 percent on Monday. Tighter liquidity usually supports the shilling by making it relatively more expensive to hold long dollar positions. "What's keeping it from doing that is the typical, natural dollar demand at the end of the month," said Nahashon Mungai, a trader at KCB Bank Group. "There has been quite a bit in the last couple of days." Traders forecast the shilling will trade in the 87.50 to 88.20 range in coming days. The shilling has lost 1.4 percent to the dollar so far this year. On the secondary market, government bonds valued at 2.4 billion shillings ($27.37 million) were traded, down from 4.4 billion shillings traded on Thursday. ($1 = 87.7000 Kenyan Shillings)