Experts bet on improving investor sentiments to lift markets

Wednesday, April 22nd, 2020 17:45 |
Standard Investment Bank says there is need to shift attention to domestic policies to guide future investment decisions. Photo/PD/File

Steve Umidha @UmidhaSteve

Stock prices and general financial well-being of the country will continue to climb if investors focus on the positives as the global economies bout to combat Covid-19 pandemic.

Online Forex trading manager, Standard Investment Bank (SIB) stressed on the need to shift attention to domestic policies to guide future investment decisions after stock market responded to coronavirus plague with worrying volatility, as some traders mainly in foreign markets had panic-sold out of fear.

“Investor confidence will play a critical role in rallying the markets…people buy out of sentiments and when it is positive, you see a boom in the market and it happens a lot during elections especially in 2002 when the late President Moi was leaving power,” said SIB’s executive director corporate finance Job Kihumba.

Despite the unclear prospects and uncertainty brought by the deadly virus and expected slower domestic economic growth, Kihumba believes positive market sentiment will play a key role in improving decisions taken by the big companies that have been able to digest negative external shocks brought by the pandemic.

“It depends on how people perceive the situation…if they see it as being well managed and right measures taken by the government, it could turn out to be a positive, it will instead of going down it will instead go up,” he said in an interview with Business Hub.

At the beginning of the year, Kihumba said, a good number of companies had announced growth plans which have since been shelved because of the ongoing uncertainty – but that could change the mindset of key decisions makers if the sentiments remain.

Modest growth

Indeed, SIB is predicting a modest growth in the forex market this year which is the largest, most liquid and most traded financial market globally with a total volume of more than $5.3 trillion traded daily.

“We are going to see new types of investments like the global markets, but I don’t see the likes of IPOs going forward…

A lot of Kenyans are going to invest in the global arena because of the globalisation taking place and the exposure to technology by younger generation as well as growing online trading,” he said.

The market has reacted to recent unpredictability with large drops since Mid-March with the Kenyan shilling getting a slight hit against the US dollar which was trading at Sh106.84 yesterday against the dollar. Online Forex exchange (FX) entails the trading of different currency pairs.

More on Economy and Policy