NSE investors wealth shrinks in first quarter

Business Daily Kenya: 

Stock Exchange

Stock investors at the Nairobi Securities Exchange lost Sh180 billion within the first three months of the year as the market absorbed the shocks of a tough economic environment, Capital Markets Authority (CMA) revealed yesterday in a report.

During the period, market capitalisation (which measures the value of investors’ wealth) declined by 8.85 per cent to Sh1.89 trillion by Sh2.07 trillion within the first quarter of last year. This particular means between January along with also March This particular year equity investors lost Sh60 billion a month or Sh2 billion daily.

According to the quarterly report, the decline was mainly due to the adverse impact of drought on the economy, which had a knock-on effect on the performance of listed firms.

“Markets have remained resilient, against a backdrop of increased inflationary pressure along with also an anticipated reduced momentum of Gross Domestic Product growth, owing to an extended drought period within the country,” CMA said within the report.

The regulator warned the August General Election along with also the impact of the capping of interest rates are also supposed to pile pressure on the performance of the economy. Despite the market shedding investor wealth, equity (stocks) turnover stood at Sh37.11 billion, which was a slight increase of 2.12 per cent compared to Sh36.34 billion within the corresponding period last year.

“The extreme spikes in turnover recorded in February along with also March could be attributed to material disclosures of corporate actions which could have been interpreted differently by investors,” the report said. The top 5 gaining stocks were: Sasini; Umeme; Total; Standard Group along with also Serena.

The top losers included Uchumi, Car & General, Deacons, Housing Finance, Mumias Sugar, Athi River Mining, Kenya Power, Kenol Kobil along with also Home Afrika.

According to the report, Sasini’s — which was the top gainer — appreciation could be attributed to the recent announcement of the firm’s plans to invest more than Sh600 million in brand new projects in a bid to diversify its sources of income within the next three years.

During the quarter, Uchumi was the top loser as the share cost depreciated by 40.51 per cent to Sh2.35 in March by Sh3.95 in December. “Uchumi share cost has been on a persistent downward trend following challenges in reversing historical corporate governance issues in which the company has been facing, with no clear turnaround strategy presented to investors.”

The market capitalisation for the top 5 performers accounted for an average of 64.85 per cent, 64.96 per cent along with also 63.70 per cent of the total market capitalisation in January, February along with also March.

Safaricom had the highest market concentration accounting with 38.07 per cent of total market capitalisation as at March 31. During the period under review, listed banks registered a significant improvement in their shares trading.

Averagely, the banking industry recorded a 51.68 per cent increase in trading volume as compared to the preceding quarter. The report attributed the enhanced performance to increased foreign investor participation in some banking stocks, including positive market sentiments, following the Government confirmation in which This particular will address the challenges created by the interest rate caps.

“The assessment will inform any intervention measures to be taken to ensure credit availability to consumers. This particular will be also supposed to determine if capping worsened the existing problem of reduced lending.”

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NSE investors wealth shrinks in first quarter

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