•The NSE 20 Share Index also declined from 1,718 points in September 2022 to 1,508 points recorded in September 2023.
•In the review period major stocks took a hit mostly on sell-off of Safaricom and KCB counters by foreign funds chasing higher returns in developed markets.
Image: FILE
A sustained investor flight in the past year has seen the Nairobi Securities Exchange lose Sh4.2 billion in share value traded at the bourse.
In the one year to September 2023, the total value of shares traded declined from Sh9.4 billion in September 2022 to Sh5.2 billion.
The latest data contained in the third Quarter of the Gross Domestic Product Report released by Kenya National Bureau of Statistics shows that despite the drop, the number of shares traded recorded a rise.
In the review period, the Nairobi bourse experienced turbulence due to a persistent investor sell-off in favor of more lucrative markets.
In the three months to June 2023, foreign investors pulled out Sh1.5 billion, a reduction compared to the Sh13.93 billion net outflow that was recorded in the first quarter, according to a report by Capital Markets Authority
Higher returns on bonds in advanced markets attracted foreign investors from frontier markets such as the NSE over the last year, as they view such securities as safe havens in times of global uncertainty.
According to the KNBS report an increase in shares traded did little to cushion the bourse from shedding its value.
“The Number of shares traded in the Nairobi Securities Exchange increased from 351 million in September 2022 to 424 million in September 2023 but the total value of shares traded declined from Sh9.4 billion in September 2022 to Sh5.2 billion in September 2023,” said the CEO of Kenya National Bureau of Statistics Macdonald Obudho.
The NSE 20 Share Index also declined from 1,718 points in September 2022 to 1,508 points recorded in September 2023.
In the review period major stocks took a hit mostly on the sell-off of Safaricom and KCB counters by foreign funds chasing higher returns in developed markets.
Kenya’s top five firms listed on the NSE lost Sh101 billion cumulatively in paper wealth in just three months ending September 2023, as foreign investors exited the bourse in favour of safer havens, amid shilling devaluation.
In the period to September, the five leading stocks by market capitalisation – Safaricom Plc, Equity Group Holdings Plc, East African Breweries Ltd, KCB Group Plc, and the Cooperative Bank – contributed an average market turnover of 65.41 per cent or Sh1.019 trillion cumulatively.
This represented a 9 per cent (Sh101 billion) shed off from 67.8 per cent turnover or Sh1.12 trillion that the five contributed in the previous second quarter, ending June 2023.
Kenya Shilling Performance
The performance has partly been attributed to the Kenyan Shilling's depreciation against all major international trading currencies.
On average, the Kenyan Shilling ceded ground against the Euro, Pound Sterling, US Dollar and Japanese Yen by 30.3 per cent, 29.7 per cent, 20.6 per cent, and 15.3 per cent, respectively.
The local currency also notably depreciated against the South African Rand, Tanzania Shilling and Uganda Shilling.
However, things are looking up for the local currency as a reduction in the demand and an increase in the supply of dollars in the economy, this December have seen the shilling's rate of depreciation drop to its lowest level since the start of the year.
Data from the Central Bank of Kenya (CBK) indicates that since the beginning of December 2023, the shilling lost three cents on average against the dollar, as opposed to an average loss of 12 cents per day in November and 13 cents in October.