Abstract:
Abstract: Political elections worldwide create tense moments in the business environment, this tends to erode
investor confidence as a result of optimism and pessimism from the public. Market bulls represent optimism
while market bears pessimism. Market optimism results in higher stock returns while market pessimism in lower
stock returns. Kenya had its hotly contested general election on 8th August 2017, which had a negative impact
to the business environment. This was followed a political handshake between the two main competitors of the
general election in trying to foster a conducive political-business environment that would result in improved
investor confidence. This paper investigates whether the Handshake between the president elect and the main
opponent in Kenya had statistically significant effect on the Nairobi Securities Exchange Index. The design of
this paper is descriptive based. The Nairobi Securities Exchange (20) index data will be obtained 42 days before
and 42 days after the handshake. The mean indices will be computed and tested for statistical significance. The
independent variable is the handshake while the indices before and after the handshake are the dependent
variables. The results will be tested at 0.05 level of significance.
Keywords: Nairobi Securities Exchange Index, Handshake, market optimism, market pessimism
