The Nairobi Securities Exchange. FILE PHOTO | NMG The share prices of select blue-chip stocks at the Nairobi bourse have gone up since Kenya imposed a dusk-to-dawn curfew over Covid-19 that has hit businesses, underlining the diverging stock market and household fortunes.
Since March 25, when the nationwide curfew was imposed, the Nairobi Securities Exchange (NSE) has been on the rise, adding Sh254 billion to shareholders’ wealth.
This has made the NSE one of the few places to make money in an economic environment that has seen plunging corporate sales, unpaid staff leaves as well as salary and job cuts.
Safaricom #ticker:SCOM, KCB Group #ticker:KCB, Equity Group #ticker:EQTY and East African Breweries Limited (EABL) #ticker:EABL accounted for more than 80 percent of the paper wealth gain over the period, underlining the impact of the four counters in shaping the performance of the bourse.
The four firms had also accounted for about 72 percent of the paper wealth erosion when the bourse hit its lowest level in mid-March as the spread of the coronavirus and other economic headwinds sparked an exit of foreign investors.
The stock gains are the product of investors seeking to buy shares at a bargain, hoping for outsized capital gains when the stock market recovers.
By Friday, the value of all the stocks on the bourse stood at Sh2.146 trillion, compared to Sh1.89 trillion on March 25. However, they remained below the Sh2.6 trillion peak of January 10.
Separate reports released earlier this week by the Kenya National Bureau of Statistics (KNBS) and the Kenya Association of Manufacturers (KAM) have painted a gloomy picture in the financial health of households and companies.
A half of the households surveyed by KNBS reported that they were either unable to pay their rent or had barely managed to make partial payments, citing reduced incomes, temporary job losses and delay in income as some of the reasons.
Manufacturers have also said that 79 percent of them were facing financial constraints, while 69 percent admitted that they were struggling to pay their employees.
The World Bank forecasts that Kenya’s economic growth will slow down to 1.5 percent this year, and contract one percent in the worst-case scenario as the restrictions to stop Coronavirus sap demand from trading partners like Europe, and disrupt both supply chains and domestic production.Analysts say that this divergence reflects a market that is largely driven by services firms, in contrast to the fact that majority of Kenyans […]
