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resume assistance soon, it would
be unrealistic to expect a major economic upswing any time soon.
After a dozen years in the doldrums, recovery will be gradual.
The key will not be foreign aid, but foreign investment and with
the world's eyes on the Middle East and economic downturn in the
first world, there is unlikely to be a rush into Kenya, either
in the form of direct or portfolio investment.
Lower interest rates, increased
liquidity, the improved business outlook post-elections and the
relative unpopularity of agricultural stocks have driven blue
chip industrials and financials higher. The main beneficiaries
have been East African Breweries; British American Tobacco; Barclays
and Standard Chartered Banks; Nation Media; Bamburi Cement;
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In its first four years in office, the Obasanjo administration
promised a lot but delivered very little.
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top 15 may now be overbought.
Two downside risks stand out
- the trend in oil pricesafter the
Iraqi war and the domestic reaction to President Olusegun Obasanjo's
easy victory in the April polls. The prospect of a combination
of lower oil prices and another four years of muddled and indecisive
economic leadership is less than positive for equities. The IMF
is urging Abuja to take the economic reform bull by the horns,
but the prospects are not encouraging: in its first four years
in office, the Obasanjo administration, promised a lot but delivered
very little.
Since oil prices over the last
three years have been much higher than the forecast medium-term
level of less than US$ 20 a barrel, Nigeria has been able to spend
much more heavily than is likely to be possible over the next
three. All of which suggests that both theNSE and the over-valued
Naira could come under pressure as and
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