Pension schemes invested more in equities by cutting back on other investment classes in the third quarter as the stock markets rallied despite political intrigues.
A survey of 372 schemes by consulting firm Zamara Group (formerly Alexander Forbes Financial Services EA) shows pension providers raised equity allocations to 23.9 per cent in the three months to September, up from 21.5 per cent in the previous quarter.
It showed fixed income still had the largest share of investment by pension funds at 70.8 per cent down from 72.9 per cent in the previous quarter, while properties and offshore investments were 3.9 per cent and 1.4 per cent respectively.
The Nairobi Stock Exchange (NSE) #ticker:NSE has rallied 20 per cent so far this year lifted by telecoms giant Safaricom and banking stocks, shrugging off jitters from a prolonged electioneering that threatened to turn ugly after the August 8 Presidential election was nullified.
A Supreme Court ruling that upheld President Uhuru Kenyatta’s win in last month’s rerun vote lifted a cloud of uncertainty that had sent investors, mostly foreigners, scampering out of the market.
The NSE shed as much as Sh22 billion in capitalisation in two days after the Supreme Court annulled the election on September 1.
It recouped losses as bargain hunters took advantage of the discounted share prices to buy low.
“Following the Supreme Court ruling upholding results of the repeat presidential elections we have seen stocks such as Safaricom #ticker:SCOM touch historic highs and this tide has lifted the entire market,” said Zamara group chief executive officer Sundeep Raichura.
Safaricom’s valuation of Sh1.1 trillion accounts for nearly half of the bourse capitalisation and is the most liquid counter at the exchange, which makes it a darling of foreign investors.
The telcos’ shares have rallied 42.9 per cent this year to Sh27.50 a share, more than double the average market performance, as investors attracted by its rising profitability and innovative products accumulate them in their portfolio.
Banking stocks have also recovered from a drop in value even as lenders in the country grappled with the effects of a year-old interest rate caps law that hurt their main revenue source, the margins on loans.
Anticipation is rife among investors that the rate capping law will be repealed once the electioneering is over.
President Kenyatta was sworn in for a second and final term on Tuesday, meaning he may no longer need to pursue populist agenda.
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