East African Stock Exchanges suffer due to Covid-19 panic

TRADING on East African stock exchanges has been hit by the impact of the coronavirus pandemic to register low turnover and market capitalisation records in recently days.

The three exchange indices- Dar es Salaam Stock Exchange (DSE), Nairobi Securities Exchange (NSE) and Uganda Securities Exchange (USE)-started to show plunging sign at the beginning this month’s second week.

The exchanges also felt the contagious effect that spill-over form cross-listed stocks originated from NSE, the largest in the region.

The meltdown of NSE trading last Friday triggered a circuit breaker 30 minutes before the closing bell after investors’ panic following the announcement of the first coronavirus case in Kenya.

Report from Kenya shows that NSE total market capitalisation dropped by Ksh120 billion ($1.2bn) – one of the largest declines in a single day in the history of the bourse.

The value of all stocks closed at Ksh2.04 trillion, compared to Ksh2.16 trillion on Thursday. In Tanzania DSE All Share Index (DSEI) was not spared losing 67.32 points and closing the week at 1,988.62 points.

The total market capitalisation shredded 3.27per cent and closing the week at 16.51tri/-. Also trading on USE hit an alltime low recording a paltry Ush1.89 million in Thursday’s trading from only 10,700 shares.

Orbit Securities said DSEI was mainly affected after melting down cross listed firms due to panicky investors that caused NSE circuit breaker “On top of the decline of domestic counters, the DSEI retreat came from tanking cross listed counters as the Kenyan market melted, leading to a triggering of the market’s circuit breaker on Friday,” Orbit said in its weekly market synopsis on Tuesday.

The top cross listed loser to DSE was Kenya Airways which dropped by 20 per cent following cancellation of numerous flights as well as global scale down of travels due to attempts to contain the coronavirus.

The large caps, KCB Bank and East African Breweries both went down 8.93 per cent and 4.44 per cent respectively.

National Media Group lost 5.97 per cent while Jubilee Holdings and Uchumi Supermarket remained rigid.Orbit said “for a second week in a row, foreign investors’ participation into DSE was minimal due to uncertainties in the global financial markets thus investors parking funds in safe assets”.During the week, foreign investors participated on the buying side, while locals dominated the market with a participation rate of 97.8 per cent and 100per cent on the buying and sell side respectively.”

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