Dylan Evans, director of global investment marketing at STANLIB said the referendum marks a solid step towards the establishment of stronger democratic rule.
“In recognition of Kenya's determination to tackle these problems and in anticipation of the passage of the [Constitutional] Charter, investors have been returning to the Nairobi Stock Exchange, which has been one of the world's best performers in 2010 to date, rising by over 37 per cent in dollar [terms] to the week ending 6 August 2010,” he said.
Evans said the stock market performance had been possible due to perception of lower political risk as well as robust GDP growth, which he said is estimated to exceed 4 per cent this year.
“Bank profits have risen strongly on the back of domestic lending growth and infrastructure development is also becoming increasingly important for Kenya due to its close ties with other fast growing East African economies such as Uganda and Sudan,” he said.
“The political and economic progress made by both Kenya and Zimbabwe this year is slowly helping to raise Africa's profile as a promising opportunity for investment.”
Funmi Akinluyi, investment director Sub Saharan Africa at Silk Invest, agrees and said the referendum has created a more united Kenya, which will help provide political stability in the country.
“Kenya has proved to be a good example for other African countries and should be used as an example of a country willing to ensure that all ethnic groups have fair representation in the country,” she said.
“As the biggest economy and the financial hub for East Africa, Kenya remains a preferred market to invest in. The level of transparency and the potential for growth both in Kenya and with neighbouring countries are factors that make it a very attractive market.”
For those UK retail investors looking to gain exposure to Kenya, data from Financial Express shows there are a limited number of funds investing in the country. There are only two IMA UT and OEIC funds with exposure to Kenya, these being the JPM Africa Equity fund and the Investec Africa and Middle East fund. The JPM fund has a 6.9 per cent weighting to the country, whilst the Investec fund has a slightly lower amount of exposure at two per cent.
Sterling returns from Kenya over 1-yr
Source: Financial Express Analytics
In terms of risk, Financial Express data shows that the JPM fund was the riskier of the two, with volatility at 16.4 per cent compared to 14.5 per cent for the Investec fund. Despite the higher amount of risk taken on by the JPM fund, it did deliver higher returns and had a positive Sharpe Ratio of 1.05 per cent meaning that investors were rewarded for the additional risk taken on by the manager.
Further analysis of Financial Express data shows there are 28 funds with exposure to Kenya, including offshore funds which are available to UK investors. The top five returning funds out of the 28 over a one year period can be seen in the chart below. These funds include a mixture of mutual, SICAV and OEIC funds.
Further returns from Kenya over 1-yr
Source: Financial Express Analytics
Looking forward Akinluyi said she remains positive on the outlook for Kenya.
“The rally we have seen in the stock market shows a recovery from last year's decline. We expect to continue to see an appreciation in stocks as many companies post stronger earnings,” she concluded.