UPDATE 1-Kenya's Equity Bank lifts stocks, shilling flat vs dlr

Wed Nov 14, 2012 10:52am EST

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(Recast markets, adds stocks)
    By Beatrice Gachenge
    NAIROBI, Nov 14 (Reuters) - Kenyan shares rose for the
second day in a row on Wednesday, buoyed by a jump in Equity
Bank on expectations of a strong full-year performance
and by bargain hunting in shares of Kenya Airways.
    The main share index inched up 0.74 points to
finish at 4,157.59 points.
    Equity Bank, one of the most traded stocks on the Nairobi
bourse and the country's biggest bank by depositors, rose 1.02
percent to 24.75 shillings, a high not seen since July 2011.
    "Earnings per share (EPS) are likely to go up in the fourth
quarter driven by wider margins on their loan book," Kuria
Kamau, an analyst at Kestrel Capital said. He added that Equity
was the only bank so far that had increased its quarter on
quarter EPS. 
    Equity said last week it expected a strong full year on the
back of falling lending rates and a favourable economy that
could spur borrowing. 
    Kenya Airways, one of Africa's leading airlines,
climbed 2.5 percent to 12.20 shillings on optimism its
retrenchment program, which partly hurt its first half results,
would pay off in the long run. 
    "After reporting that (first half-loss) ... People thought
the share had reached its bottom, and now I guess people are
taking advantage and accumulating," Kamau said 
    The airline, 26.73 percent owned by Air France-KLM
, expects to recover from a first-half loss of 6.59
billion shillings, but said its full year profits would still be
less-than a quarter of last year's. 
    "(Kenya Airways) spent 826 million shillings (retrenchment)
and they expect to save 1.2 billion shilling a year. That is
good for their costs," said Kamau.     
    On the foreign exchange market, the shilling closed at
85.70/80 per dollar, barely changed from Tuesday's close of 
85.60/80, underpinned by the central bank draining excess
liquidity from the market.    
    "Its (mop-up) does in a way help support the shilling
because some of the liquidity which would have been sitting idle
is taken out for another one week," Ignatius Chicha, head of
markets at Citibank, said.
    During the session, the central bank absorbed 17.65 billion
shillings for the 15 billion it intended to mop-up via
repurchase agreements. It received bids worth 24.55 billion
shillings.
    Traders said an influx in liquidity in the market made it
cheaper for banks to fund dollar positions, putting pressure on
the local currency.
    This year, the central bank has regularly mopped up excess
shillings from the market via repurchase agreements (repos) in a
bid to stabilise the currency, which is down 0.7 percent
year-to-date.
    On the primary debt market, the weighted average yield on
Kenya's 182-day Treasury bills fell to 10.325 percent
at auction on Wednesday, from 10.923 percent at the previously. 
    The central bank said it received bids worth 18.3 billion
shillings ($214.16 million) for the 4 billion shillings worth of
debt on offer, representing a 457 percent subscription rate. It
accepted 10.8 billion shillings.
   
               ...........................Shilling spot rates
                  .....................Shilling forward rates
                           .......................Cross rates
         ..................................Local contributors
           .......................Central Bank of Kenya Index
          .....................Kenyan Bonds contributor pages
                          ...............Treasury bill yields
        ..................Central bank open market operations
        .........................Horizontal repo transactions
         ,       ................Daily interbank lending rate
              .............................Kenya Bond pricing
             ..................Real time Africa economic data
 <ECI & AFR> ...........................African economic news
          .................................NSE-20 Share Index
         .................................NSE All Share Index
             ...........................FT NSE Kenya 15 Index
             .......................... FT NSE Kenya 25 Index
  SPEED GUIDES:
                                    
            
 ($1 = 85.4500 Kenyan shillings)

 (Editing by Yara Bayoumy)
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