NSE profit drops 48pc to Sh40m
The Nairobi Securities Exchange (NSE) posted a 48 per cent dip in net profit during the first half of 2022 on low trading activities.
Earnings dropped to Sh40 million from Sh77 million during the same period last year, to as the election frenzy and rising inflation across the world drove an investor selloff.
At the close of the first half of 2022 equity turnover decreased by 22 per cent to Sh54 billion, compared to Sh69.7 billion recorded during the same period in 2021.
Reallocation of capital
“Decline in equity turnover was attributable to a reduction in trading activity mainly from international and domestic institutional investors. This was as a result of international institutional investors reallocating capital to global fixed income assets, whilst domestic institutional activity declined owing to reallocation of capital to domestic fixed income assets,” the NSE told investors.
As at June 30 2022, total bonds turnover stood at Sh387 billion down from Sh471 billion recorded over a similar period in 2021.
Foreign investors who account for over 70 percent of trading activities at the bourse sold out in search of safe havens in the period.
Commissions from equity trading fell by 22 per cent from Sh167million to Sh129.8million in the period under review. Equity turnover for the period stood at Sh54 billion in the first half of 2022, compared to Sh69.7 billion in the same period in 2021.
The value of all listed companies at the NSE stood at Sh1.94 trillion compared to Sh2.7 trillion recorded over a similar period in 2021.
“The Exchange will continue to engage prospective issuers to consider capital markets financial solutions to fund their business growth and development. With the increase of issuances in the corporate bond market, we will continue to interest companies to use this product to complement their funding needs,” said NSE chief executive Geff Odundo.
Bond levies decreased from Sh33 million to Sh27.1 million in the period under review on reduced secondary trading activity due to increased market yields offered in the primary market.
Total expenses for the group increased by 7 per cent to Sh275.1 million as the NSE increased activities related to market lobbying and advocacy.
NSE’s total assets decreased slightly by 4 per cent from Sh2.44 billion to Sh2.34 billion. This was as a result of a write down of its fixed assets and payment in 2021 for a total Sh267 million on the 2020 final dividend and 2021 special dividend.
The bourse expects trading to return to normalcy after completion of the election process, which has since dragged on to the Supreme Court and has already affected investor sentiments and trading activity.