The value of bonds traded in the secondary market at the Nairobi Securities Exchange (NSE) hit an all-time high of Sh687.5 billion in 2020, boosted by demand for government securities that outperformed all other investment classes in returns during the year.
The value was a five percent rise compared to 2019, when the turnover stood at Sh655.06 billion.
Bonds outperformed other asset classes such as equities, property and bank savings last year, with new issuances averaging between nine and 13.4 percent in interest.
“This (rise in bonds turnover) is attributable to local institutional investors increasing their allocation to Treasury bonds as they sought for stable returns, after increased volatility in other asset classes,” said analysts at Cytonn Investments in their annual markets review for 2020.
Bond trading opened the year strongly, with turnover in quarter one hitting Sh157.9 billion, before dipping to Sh136.7 billion in quarter two due to market jitters and disruptions caused by Covid-19 restrictions.
The traded turnover rose in the third quarter to hit Sh227.9 billion as the economy reopened gradually and investors sought to put their money in safer assets, before easing to Sh158.9 billion in the last quarter of the year.
In contrast, equities turnover went down by 3.4 percent from Sh153.8 billion in 2019 to Sh148.7 billion last year, due to lower demand by investors who were wary of the negative returns on most counters.
The benchmark NSE 20 share index was down 29.6 percent for the year, with investor wealth —as measured by market capitalisation—falling by Sh203.2 billion to Sh2.336 trillion.