Kenya's bourse sheds 4 pct as bank stocks plunge over rates cap

The Nairobi Securities Exchange (NSE) 20 Share Index Thursday fell 152.92 points or 4.4 percent to hit 3,309.76 as the market recorded one of the biggest plunges following jitters in the banking sector over the capping of interest rates.

Banks stocks led the decline as their share prices went down by up to 11 percent on the first day of trading after President Uhuru Kenyatta Wednesday signed into law a bill to limit lenders' rates.

The stocks that include Diamond Trust Bank, Kenya Commercial Bank (KCB) and Cooperative Bank, which all fall in the indicative 20 share index, were on a free fall as jitters over the interest law spread at the bourse.

Diamond Trust Bank registered the biggest fall Thursday, dropping 11 percent from 1.6 U.S. dollars to 1.4 dollars.

Cooperative Bank, similarly, declined 10 percent to end the day at 0.11 dollars, down from 0.13 dollars Wednesday while KCB, the East African nation's largest lender by assets, shed 10 percent to close the day at 0.30 dollars.

Analysts had warned that the move to cap interest would lead to drop in share prices of banking stocks, which form the bulk of those in the 20 Share Index, leading to investor flight.

Safaricom, Kenya's leading telecom operator, moved over 26 million shares, an increase from 22 million shares at a declined price of 0.20 dollars, a 6 percent drop.

Overall, some 37.6 million shares valued at 7.7 million dollars were traded, down from 37 million shares that were valued at 8.4 million dollars Wednesday.

As the 20 share index, the All Share Index similarly dropped 5 percent to 139.14 from 146.48 while the NSE 25 Share Index eased 3.00 points lower to stand at 3,913.93.

The bond market had securities worth 4.4 million dollars traded, a decline from 18 million dollars Wednesday. Endit