Equities and bonds turnover at the Nairobi Securities Exchange (NSE) rose sharply in May, driven by increased trading in blue-chip stocks and demand for infrastructure bonds on the fixed income segment. The NSE said that turnover in the equities segment rose from Sh9.9 billion in April to Sh14.2 billion in May, while bonds turnover rose from Sh67.6 billion to Sh106.9 billion.
“Equity turnover increased by 43.4 percent in May 2021, while bonds turnover increased by 58.1 percent,” said the NSE in a monthly market report.
The upturn in equities trading volumes followed an increase in share prices of blue-chip counters which account for the bulk of activity at the exchange.
Safaricom , which is the largest firm in the market by market capitalisation, accounted for the biggest share at 56.5 percent of the total turnover. Its turnover rose from Sh5.65 billion in April to Sh7.99 billion last month, with the demand driven by the successful bid for a telco licence in Ethiopia.
This spurred the share price to hit a new all-time trading high of Sh43.45, which also saw some investors jump into the market to take profit on the stock. KCB also registered a big jump in traded turnover, from Sh984.2 million in April to Sh2.03 billion last month, as did Equity Holdings which saw activity jump from Sh883.4 million to Sh1.93 billion and EABL from Sh823.1 million to Sh1.2 billion.
The four counters also dominate the NSE’s total valuation, accounting for 78.3 percent of the bourse’s total market capitalisation. This dominance has made it difficult to gauge the true performance of the NSE, whose indices rise and fall based on the performance of these counters, especially Safaricom.
In the fixed income segment, higher trading volumes have been driven by demand for fixed income papers, which carry the advantage of being tax-free.
Bonds in general have also become an attractive investment option for many investors who have been stung by the low or negative returns in other investment classes such as equities and real estate.
More people are also saving out of caution due to the risk of job losses in the Covid-19 period, and some of the funds are being put in bonds to generate income as an alternative to leaving the money to lie in low-interest bank accounts.
