The Nairobi Securities Exchange (NSE) main index on Monday hit a 17-year low as foreigner investors depended their withdrawal from the equities market in the wake of the global coronavirus outbreak that has cut shareholder wealth by Ksh458 billion in a month at the Kenya bourse.
The benchmark NSE 20 Share Index, which captures the movement of select blue chip stocks like Safaricom, East African Breweries Limited (EABL), closed at 1,958.5 points after shedding 66.75 points.
The last time it was near this level was on July 24, 2003, when it closed at 1,948.5 points when Kenya was at the start of Mwai Kibaki’s administration, which is associated with the country’s economic resurgence and a stock market boom.
Analysts have argued that the sell-off is part of a global trend as investors dump stocks and seek shelter in fixed income assets including government bonds.
On Monday, the combined wealth of investors at the NSE shed Ksh72.3 billion ($720 million) to Ksh1.959 trillion ($19 billion)–the first time in nearly three years it has dropped below the Sh1 trillion ($10 billion) mark. Both the NSE 25 and NSE all share index also dipped.
Only 11 of the 45 equities that participated in trading yesterday posted gains as 30 companies shed value.
Dividend announcements by KCB, Equity Bank, Cooperative Bank, Standard Chartered Bank, Stanbic Bank, Kakuzi, Limuru and Umeme last week failed to pump investors’ confidence and lift shares.
Safaricom, Equity, East African Breweries, KCB and Co-operative Bank, where NSE investors have put at least 74.4 percent of their bourse wealth, all posted price declines Tuesday to collectively lose Ksh57.9 billion ($570 million).
Equity and KCB were the third and fourth highest losers on the bourse, shedding 8.34 percent and 7.64 percent respectively.
Safaricom investors lost Ksh32 billion ($320 million) followed by Equity ($120 million), KCB Group ($99 million and EABL ($27 million).
These stocks are favoured by foreign investors, partly due their steady dividends paying history.Heavy plungeAnalysts reckon that foreign investors, who make up about 70 percent of daily trading at the NSE, have been net sellers in the past three weeks.They have also been selling stocks in other markets, including the United States, Japan, the United Kingdom and Australia.Genghis Capital senior research analyst Churchill Ogutu said the heavy plunge in prices is linked to events in the global markets as foreign investors exit and consolidate their holdings in their domestic markets.The outbreak has wiped equity values due to mounting concern […]