Monthly bonds turnover on the Nairobi Securities Exchange (NSE) hit an all-time high of Sh118.1 billion in September on the back of a liquid market and demand for infrastructure bonds, while equities remained subdued as blue-chip share prices retreated.
The previous high in bonds turnover for a single month was the Sh106.9 billion that was traded in May.
Demand has been high for infrastructure bonds listed at the NSE, which remain attractive due to their tax-free interest.
“We maintain our expectation of activity in the secondary bond market being driven by investors hunting for higher yields and profit-making opportunities,” said analysts at AIB-AXYS in a market report.
Last month, the government floated a 21-year infrastructure bond that attracted a record Sh151.3 billion in bids, out of which the Central Bank of Kenya (CBK) took up Sh106.75 billion.
Investors were therefore left with Sh44.6 billion in unused liquidity, which they largely directed to the secondary market at the NSE to buy into already listed infrastructure bonds.
In the nine months to September, total bonds turnover has now hit Sh470.5 billion, which is 60 percent higher compared to the turnover of Sh294.6 billion in the corresponding period last year.
On the other hand, equities turnover declined last month to Sh10.2 billion compared to August’s Sh11.9 billion. In the nine month period, investors have traded Sh69.8 billion shares, which represents a decline of 16.2 percent compared to the turnover of Sh83.2 billion in the nine months to September 2020.
The retreat last month is partly attributable to the fall in share prices of major blue-chip stocks such as Safaricom, Equity Bank, KCB, and EABL, which account for the bulk of daily trades.
Foreign investors also turned into net sellers during the month after their strong buying activity in August, largely due to profit-taking on Safaricom and the large banks.
They made net sales worth Sh941.5 million last month, compared to net buys of Sh1.73 billion in August.