A Nairobi Securities Exchange staff on the trading floor. FILE PHOTO | NMG The Nairobi Securities Exchange (NSE) outperformed its peers in Africa on the back of better returns from Safaricom and banking stocks that were attractive to foreign investors.
The NSE’s All-Share Index (NASI), which tracks the market value of shares of all listed firms, gained 18.5 percent to close the year at 166.41 points. As a result, the bourse raced ahead of Johannesburg Stock Exchange (JSE), which returned 8.24 percent last year and Morocco’s Casablanca Stock Exchange (7.72 percent).
Nigeria’s and the Egyptian bourses declined by 14.6 and 19 percent respectively.
Last year’s performance was in contrast to 2018 when Nairobi’s All-Share Index fell by 18.0 percent, a bigger decline compared to the four bourses that also posted negative returns in the year.
The reversal in fortunes made the Kenyan bourse attractive to foreign investors seeking capital gains returns.
NSE chief executive Geoffrey Odundo said the stable shilling had added to the attractiveness of the bourse, with investors seeing lower currency fluctuation risk relative to other emerging markets.
“The fact that it outperformed other key markets means investors were more comfortable with main metrics such as stability of currency and free entry and exit of funds,” said Mr Odundo.
Foreign investors at the NSE made net inflows of Sh1.86 billion in 2019. This was in contrast with back-to-back net selling of Sh28.9 billion and Sh11.9 billion in 2018 and 2017 respectively.
Despite the gains, the NSE remains relatively smaller compared to the South African, Nigerian and Egyptian bourses. The JSE, for instance, has a market capitalisation of Sh25.5 trillion from the 375 firms listed on the South Africa bourse. The NSE has 62 firms with a market value of Sh2.5 trillion while Nigeria has 116 firms valued at Sh3.73 trillion while Egypt is at Sh4.23 trillion.
Safaricom and banks played a key role in the NSE turnaround in 2019.
“With regards to banking, we observed price rallies ahead of the interest rate capping law vote in Parliament and this continued after the law was repealed,” said Renaldo D’Souza, head of research at Sterling Capital Limited,.The Nairobi bourse made a paper wealth return of 16 percent — or Sh399 billion — to hit Sh2.5 trillion.The positive return at the NSE was on the back of Safaricom and bank stocks, which account for nearly 80 percent of the bourse’s market value. However, more than half of the NSE firms […]
