The coronavirus pandemic fuelled fear among foreign investors at the Nairobi Securities Exchange (NSE), pushing the market into a bear run in 2020.
According to Capital Market Authority (CMA) end of year Statistical bulletin, all indices at the Nairobi bourse performed poorly, with net foreign outflow hitting Sh28.63 billion compared to a net foreign inflow of Sh1.38 billion in 2019.
The exit of foreign players at NSE ends up hurting the overall performance since they largely control the market.
Average foreign investors participation in the fourth quarter accounted for 65.97 per cent compared to 67.10 per cent recorded in quarter three indicating a 1.13 per cent decrease in foreign investor participation during the quarter.
The NSE 20 benchmark index dropped by 29.61 per cent, closing the year at 1,868.39 points compared to 2,654 .39 in 2019.
It hit a 10-year low in March, moments after the country announced its first coronavirus case, shedding off 161.91 points (6.5per cent ) to close the day at 2337.03 points.
According to CMA, the rich index closed the year at 1,868.39 points, a 29.6 per cent drop from the 2,654.39 points recorded at the beginning of the year, as both local and foreign investors shifted their investments away from listed equity, to mitigate against the declining value of their portfolios.
Consequently, the Nairobi All Share Index (NASI) sunk to close the year at 152.11 points compared to 166.4 1 points in 2019, translating to 8.9 per cent drop.
The volume of shares traded during the year dropped by a 24.9 per cent to 969.6 million compared to 1.3 billion in 2019.
The poor show saw investors at the bourse lose at least Sh200 billion in paper wealth last year as the virus took a toll on the economy.
Market capitalisation dropped to Sh2.34 trillion compared to Sh2.54 trillion posted in 2019.
The stock market was severely hit at the onset of the Covid-19 in the country, dropping to the least monthly market capitalisation in history, eroding billions of investors' net worth.
''It should, however, be noted that the Sh2.34 trillion is a Sh320 billion gain from the drop of Sh2.02 trillion recorded at the onset of Covid-19 in March 2020, which was also the lowest monthly market capitalization,'' CMA said.
Even so, relaxation of Covid-19 preventive measures that had stalled social-economic activities in July saw market capitalization rise by 8.8 percent to Sh2.3 trillion in Q4. 2020 from Sh.2,15 trillion recorded in Q3. 2020.
On the other hand, the bond market turnover during the quarter under review stood at Sh169.26 billion, compared to Sh106.46 billion registered in the corresponding quarter in 2019, a 58.99 per cent increase.
There was also increased participation in other asset classes in the capital markets with total bond turnover totalling Sh691.83 billion, a six per cent increase from the Sh651.68 Billion recorded in 2019.
During the quarter, four East African countries, namely Uganda, Burundi, Tanzania, and Rwanda launched an automated platform, a project funded by the World Bank.
The Automated system is known as EAC Capital Markets Infrastructure (CMI) aims is to integrate the different stock markets.