UPDATE 1-Kenya shares rally on Safaricom, shilling flat vs dollar

Thu Nov 15, 2012 10:38am EST

* Safaricom strong FY growth expectations buoys stock market
    * Tightening liquidity to lend support to shilling in coming
days

 (Recast market close, adds stock)
    By Beatrice Gachenge
    NAIROBI, Nov 15 (Reuters) - Kenyan shares extended a three
day rally on Thursday, spurred by foreign investor interest in
leading telecoms firm Safaricom on hopes for strong
full-year earnings, while the shilling closed flat against the
dollar. 
    The main share index rose 0.1 percent to 4,160.49
points. 
    Safaricom, one of the most traded stocks in the Nairobi
bourse, rose 1.1 percent to 4.60 shillings ($0.05).
 
    "Some investors are generally surprised at the strength of
the numbers (first-half earnings)," Eric Musau a research
analyst at Standard Investment Bank.
    "(Investors) may be looking at that and considering the
strong overall outlook into 2013 and they may be building up
positions on the basis of that."
    Safaricom raised its forecast for full-year revenue growth
to about 12 percent from low-to-middle single digits after it
posted a 113 percent jump in first-half profits to 11.5 billion
shillings on Nov. 8. 
    Musau said most retail investors were profit taking on
Safaricom after the share price rallied to a two-year high on
Nov. 9, creating supply for foreign investors.
    Kenya Airways, one of Africa's leading carriers,
rose for the fourth day in a row, edging up 0.4 percent to 12.25
shillings, the highest level in eight sessions. 
    Analysts said they expected the airline, 26.73 percent owned
by Air France-KLM,to recover from high staff costs
after its retrenchment program in September, which is expected
yield savings of 1.2 billion shillings a year. 
    In the foreign exchange market, the shilling closed at
85.60/80 per dollar, barely changed from Wednesday's 85.70/80,
helped by central bank's tightening of excess money supply in
the market. 
    During the session, the central bank absorbed 10 billion
shillings via the repurchase agreements at 6.925 percent. It
received bids worth 10.31 billion shillings. 
    This year, the central bank has regularly mopped up excess
shillings from the market via repurchase agreements to stabilise
the currency, which is down 0.5 percent year-to-date.
    The shilling is seen range-bound in coming days as companies
withdraw money from banks to pay value-added taxes (VAT), which
are due around the 20th day of every month, helping tighten
liquidity in the market. 
    "Taxes are going out next week ... that will drain a bit of
liquidity," Dickson Magecha, a trader at Standard Chartered
said, adding that high investor demand in the short-end of the
government paper would also help drain out excess shillings.
    The yield on Kenya's benchmark 91-day Treasury bills
 fell to 9.621 percent on Thursday from 10.346 percent
last week, 
    The central bank said it received bids worth 25.1 billion
shillings for the 4 billion shillings on offer, a 628 percent
subscription rate, and accepted bids worth 12.1 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 = 85.6000 Kenyan shillings)

 (Editing by Yara Bayoumy)
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