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Securities Exchange investors shed Sh100b in paper wealth

By Zachary Ochuodho
Tuesday, June 2nd, 2020
Stock Exchange. Photo/File

BUSINESS: Investors in Nairobi Securities Exchange (NSE)-listed companies shed about Sh100 billion in paper wealth between May 1 and May 29, mainly due to losses recorded in some of the blue-chip companies.

Data provided by the bourse shows on May 1, the market capitalisation of the listed companies stood at 2.3 trillion but this got reduced to Sh2.2 trillion until the end of May 29 2020.

Market capitalisation, also called market cap, refers to the total value of all the  company’s shares of stock.

The equities market was on a downward trajectory, with NASI, NSE 20 and NSE 25 declining by 1.8, 0.5 and 2.7 per cent respectively.

Analysts argue that the losses in the equity market during the month were driven by losses recorded by Diamond Trust Bank, Standard Chartered Bank, Equity Group and EABL, of 14.2 per cent, 11.5 per cent, 6.4 per cent and 6.2 per cent respectively.

“During the month of May foreign investors continued to flee blue-chip firms over the coronavirus, making it the single largest drop in a day at the bourse’s history,” Elizabeth Nkukuu, Chief Investment Officer at Cytonn Investment said.

She said as at the end of the month, Safaricom and the big banks led in shedding value in the wake of the sell-off.

During the month, she added, the T-bill auctions recorded an oversubscription, with the overall subscription rate coming in at 103.7 per cent, compared to 72.8 per cent recorded in the month of April.

Churchill Ogutu, senior research analysts from Genghis Capital said during the month, inflation declined to 5.5 per cent from 5.6 per cent recorded in April, in line with their projections of 5.5 per cent and 5.7 per cent. – Zachary Ochuodho