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Inflation blamed for NSE decline

Published on October 16, 2007, 12:00 am By John Oyuke

Nairobi Stock Exchange (NSE) has said the increasing cost of living in the country has largely caused the falling share prices at the bourse . Chief Executive, Mr Chris Mwebesa, said increased inflation linked to rising costs of fuel and other basic necessities as a key factor that has led to investors selling off shares to increase their disposable income . He said a recent survey conducted by the bourse shows that investors are disposing their shares to increase their purchasing power in response to rising prices of basic necessities and fuel and an attractive debt market.

"Prices of basics such as bread and wheat flour have gone up in recent weeks, fuelling the inflationary pressure, He said the rising interest rate had also made the debt market more attractive than equity segment, leading to some investors liquidating their holding of equity securities and shifting their portfolio to the debt market." Mwebesa said in a statement.

Trying to score political points as Finance minister, Mr Amos Kimunya, has done is only counterproductive. The minister claimed that the bourse had lost Sh200 billion in shareholder's wealth since Raila took the lead in poll ratings.   Any utterances the minister makes are likely to be taken seriously both locally and in the international arena and should be weighed carefully. Issues of capital market reform must be approached more soberly than is possible on the campaign trail.

George Aike,

Ndhiwa, Ratang'a

Akelo nyar Kager, jaluo@jaluo.com

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