“The movement will be around retail investors because a lot of them will be looking for money for the festive season. We could see them selling off, especially where they’ve made gains and, with the market up 40 per cent year-to-date, a lot of them have made gains in one counter or another,” Brenda Kithinji, research analyst at Standard Investment Bank, told CNBC Africa on Monday.
“They will be looking to lock in those gains, sell off and use that money for their Christmas shopping.”
The Kenyan market should see movement this week and analysts have forecast increased investor interest and activity in a number of key sectors, most notably, retail.
“The retail sector is going to benefit the most from the Christmas shopping season. The down side is the increase in VAT, which has led to prices going up for a lot of the goods. People might shop a bit less because of that but largely, we do expect a lot of activity around retail, especially during this time of the year,” said Kithinji.
The market is also expectant of the Central Bank of Kenya’s policy meeting on November 5, where the bank will decide whether or not to keep its lending rate.
Kithinji stated that depending on what the Central Bank decides to do with the rate, the Kenyan shilling will most likely react to that movement.
“For the most part of the month we’ve seen the Kenyan shilling strengthen quite a bit to 85 shillings, so the weakening was just a temporary movement. Going forward, I think it will strengthen and again, this depends on the monetary policy commission’s decision in terms of the central bank rate,” she said.
“Our expectations are that the monetary policy will retain the Central Bank rate at the current 8.5 per cent level. As much as we’ve seen inflation come down in October to around 7.7 per cent, there’s still some risks within the economy and they would rather keep the interest rates at that level.”