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Investors wealth up as NSE recovers from virus shocks

By Noel Wandera
Friday, April 23rd, 2021
Nairobi Securities Exchange. Photo/PD/FILE
In summary
    • Following a challenging 2020 year on both the global and local financial markets, the beginning of this new year brought renewed hope especially due to the mass vaccination and relaxed international travel measures put in place on the onset of the pandemic.
    • Market performance at the Exchange has shown considerable improvement on both equities and bonds. Generally, both year on year and quarter on quarter comparisons of key indicators show growth at the bourse.
    • The foreign investor net cashflow recorded a net outflow at the bourse at Sh976 Million, an improvement compared to Sh2.67 billion net outflow for fourth quarter of 2020. Equity trading remains foreign dominated with an average of 60.38 per cent accounting for foreign investor participation in first quarter 2021.

The secondary equities and bonds market remained resilient, recording increase in market capitalisation in the first quarter of 2021 on Covid-19 vaccination campaign and relaxed international travel measures.

According to Capital Market Authority (CMA) quarterly statistical bulletin, end of first quarter 2021 market capitalisation recorded an 4.29 per cent increase to Sh2.44 trillion up from Sh2.34 trillion in quarter four of 2020. 

Wyckliff Shamiah, CMA chief executive said market performance at the Nairobi Securities Exchange has shown considerable improvement on both equities and bonds. 

“Generally, both year-on-year and quarter-on-quarter comparisons of key indicators show growth at the bourse,” he added. 

He said following a challenging 2020 on both the global and local financial markets, the beginning of 2021 brought renewed hope, especially due to the mass vaccination and relaxed international travel measures put in place on the onset of the Covid-19 pandemic.

In its 2021 outlook for Kenya, the World Bank recognises that economic recovery is underway, albeit uneven for different sectors in the economy, said Shamiah.

Shamiah said any anticipated bumps in the short-term would likely be because of the renewed economic activities disruption to contain the spread of the coronavirus and other factors such as weather-related shocks.

During the period under review, the equities market’s turnover for the first quarter of 2020 stood at Sh31.73 billion, compared to Sh27.5 billion registered during the same period in 2020,  a 15.34 per cent increase.

However, Shamiah noted that year-on-year equity turnover showed a 27.39 per cent decrease from Sh43.7 billion in quarter one 2020 to Sh31.7 brillion in the quarter ending March 2021.

Foreign investors

The period also saw foreign investors withdraw Sh976 million, an improvement compared to Sh2.67 billion net outflow for fourth quarter of 2020. 

Foreign players dominated equity trading, with an average of 60.4 per cent, accounting for foreign investor participation, while in the bond market, turnover increased by 17.80 per cent with Sh199.4 billion worth of bonds traded compared to Sh169.3 billion traded in the fourth quarter of 2020.

With a bond turnover of Sh157.98 billion recorded in first quarter of 2020, this shows a 26.21 per cent increase in bond turnover using year on year comparison. 

Shamiah said during the period under review assets under management (AUM) by collective investment schemes surpassed the Sh100 billion mark.

From the latest figures, as at December 2020, the value of AUMs was Sh104.71 billion with majority of these funds being invested in government securities (44 per cent) and fixed deposit accounts (34.5 per cent). 

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