Businesses & Financial News

Markets gain Sh42Billion after Monday’s Supreme Court ruling

Market capitalisation jumped to Sh2.192 trillion from Friday’s close of Sh2.15 trillion while Kenya’s Eurobond yields trended lower from 15.1 per cent on Friday to 13.84 per cent on the 10-year 2024 bond.

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Nairobi Securities Exchange (NSE) investors gained Sh42.1 billion in paper wealth in the highest daily gain as markets embraced the Supreme Court ruling which upheld the win by Deputy President William Ruto following the August 9th elections.

The 7-bench judge led by Chief Justice Martha Koome unanimously dismissed seven petitions challenging Ruto’s victory after his closest competitor Raila Odinga challenged his victory after alleged electoral malpractice.  The country’s apex court however, ruled that Odinga’s legal team lacked evidence to back those claims.

Businesses welcomed the ruling, which is expected to lift the economic stasis that has slowed activity in the country since the August 8 General election over the uncertainty of the court outcome.

Inflationary concerns have been dominating the airwaves recently, rising to a fever pitch in July when the overall inflation rate reached 8.3 percent, jumping to 8.5 percent in August.

The country’s annual inflation rate has been rising on account of many macroeconomic factors including the Covid-19 pandemic but has intensified due to the ongoing global war between Russia and Ukraine.

The ensuing effect of rising inflation – which is a general increase in the prices of goods and services in an economy, has led to a slow growth in consumer spending among Kenyans, with most households today opting for cheaper alternatives to the products they were accustomed to.

In fact, figures by the Kenya National Bureau of Statistics (KNBS) show that the Consumer Price Index CPI in the country rose to 125.05 points in July from 124.22 points in June of 2022.

Ordinarily, when there is an upward change in the CPI, this means there has been an increase in the average change in prices over time – which eventually leads to adjustments in the cost of living and income.

Consumers lose purchasing power when prices increase, and similarly gain purchasing power when prices decrease. Normally, the purchasing power depends on the amount of income a person makes adjusted for inflation.

Naturally, employment levels and average salary levels tremendously influence the purchasing power of an economy and if the conditions persist, economists like Peter Macharia fears that monetary tightening may turn out to be more than expected, a scenario he thinks may impact credit growth and cost of borrowing in the long run.

Last month a kilo of carrots retailed at an average of Sh105.3, which was an increase of 41 per cent from Sh74.65 in the same month last year. Other commodities that recorded a barb in price include maize, with a kilo going at Sh72.32 compared to Sh54.98 last year.

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