The Nairobi Securities Exchange. FILE PHOTO | NMG The value of shares traded on the Nairobi Securities Exchange (NSE) in the first-half of the year rose by five percent, even as investors continue to experience a tough year where the value of their holdings at the bourse has slumped by Sh436 billion in the six-month period.
Trade turnover rose to Sh83 billion for the six months to June 30, compared to Sh79.2 billion in the corresponding period last year, new data shows. While the higher trade volume bodes well for stockbrokers, who rely on commissions earned from facilitating trading, investors have been counting their losses as share prices fell in the same period.
The rise in turnover even as share prices fell also reflects the sustained selling activity of foreign investors, who have this year tended to seek safety in developed markets as the Covid-19 pandemic continues to ravage global economies.
They made net sales of about Sh22.8 billion from the NSE in the first half of the year, largely on the five largest stocks that account for three quarters of the NSE’s total market capitalisation of Sh2.1 trillion.
The coronavirus pandemic has negatively affected the performance of many listed companies, cutting profits and bringing job losses and pay cuts.
In the real economy, this has reduced the purchasing and investing power of individuals, which affects the stock market, and therefore analysts see the leaner times for the bourse persisting until the economy is fully reopened. “We expect the uncertainty-led slowdown in the equities market to persist with the extended duration of reopening of the economy expected to dim near-term prospects of recovery of business activity,” said analysts at investment bank Genghis Capital.
Most of the market activity in the period was concentrated on the large blue chip companies, including Safaricom, East African Breweries Limited (EABL), Equity Bank, KCB and Co-operative Bank.
While these firms saw more trading activity, mainly by foreign investors, their prices fell and due to their oversized influence on the market they dragged the indices and market capitalisation lower. The benchmark NSE-20 share index was down 27 percent in the six months to end June at 1,942 points, while the all-inclusive NSE All Share Index fell 17 percent to end the half-year at 137.7 points. Between January and June, the share price of Safaricom retreated by nine percent, EABL (18 percent) and Equity (35 percent). KCB and Co-operative Bank also saw their […]
