Investors at the Nairobi Securities Exchange (NSE) lost Sh53 billion in paper wealth in the three months to June 2024, as market volatility continued to impact the financial market.
Latest market insights by Kenya Institute for Public Policy Research and Analysis (KIPPRA) shows that the loss majorly resulted from a 2.97 drop in the total value of shares traded in the period.
The period was marred by political tensions - mostly occasioned by the Gen Z driven demonstrations - raising uncertainties among investors which worsened market conditions.
KIPPRA notes that, the index experienced fluctuations throughout the quarter, driven by varied investor sentiment.
“There was volatility in market capitalisation over the quarter. The market capitalisation declined by 2.97 per cent in April-June 2024 from Sh1.763 trillion to Sh1.710 trillion,” KIPPRA said in the quarterly report.
Compared to the same period in 2023, the market capitalisation recorded a rise from Sh1.666 trillion in June 2023 to Sh1.710 trillion in June 2024.
The public policy body says that the significant increase in market capitalisation in the long run underscores a period of active investment and a generally positive investor sentiment.
In the period under review, market cap registered a high of Sh1.801 trillion and a low of Sh1.624 trillion.
However, the value of foreign participation in the three months improved to hit Sh287.6 billion in the volume of bonds traded.
This reflects a 195 per cent increase compared to a similar period in 2023, which recorded a total volume of Sh147.405 billion.
The total foreign purchases of Sh11.578 billion exceeded the total foreign sales of Sh8.6 billion in April to June 2024.
Even though foreign investors continued to buy more than they sold, their share of total equity turnover dropped from 61 per cent in January-March 2024 to 34.6 percent in April-June 2024.
Equity turnover refers is the volume or value of shares traded over a set period in a stock market.
This decline was due to a significant increase in overall equity turnover, which rose from Sh18.508 billion in the first quarter to Sh29.135 billion in the second quarter of 2024.
“The equity turnover reflects the improvement in the business environment and the recovery of economic and trading activities, which boosted Kenya’s liquidity and investor confidence,” KIPPRA added.
In the second quarter of 2024, Kenya's Eurobond yields showed a steady increase, beginning at 9.1 percent in April, climbing to 9.3 percent in May, and reached 10.3 percent by June.
Meanwhile, the NSE saw a notable decline in its NSE20 share index, which dropped by 5.5 per cent over the same period, falling from 1,752.43 points in early April to 1,656.50 points by the end of June.
Despite the performance, the NSE is eyeing a boost in foreign investor participation after the inclusion of five more Kenyan listed companies in Morgan Stanley Capital International's (MSCI) frontier market indices.
In January, the Nairobi Securities Exchange had recorded improved activities with market capitalisation rising to Sh1.8 trillion on enhanced investor confidence.
This was on the back of the stabilisation of the Kenyan Shilling, which has consequently radiated a positive influence on the equity markets.
Foreign participation in the equity market has recently attracted global institutional investors such as Blackrock, following recent market recovery and positive developments in the Kenya's foreign exchange market.
African markets also saw diverse outcomes. While Kenya's NSE20 index declined, South Africa's FTSE All Share Index, Egypt's EGX30, and Nigeria's NGSE30 all recorded gains, reflecting a range of investor sentiments across the continent.