NAIROBI, Kenya – Investors at the Nairobi Securities Exchange (NSE) saw their paper wealth shrink by Sh53 billion in the three months leading up to June 2024, a period marred by heightened political tensions and youth-driven protests that rattled investor sentiment.
The latest insights from the Kenya Institute for Public Policy Research and Analysis (KIPPRA) reveal that market volatility, exacerbated by these unrests, played a significant role in the decline.
KIPPRA’s quarterly report indicates a 2.97% dip in the total value of shares traded during the period, with market capitalisation dropping from Sh1.763 trillion to Sh1.710 trillion.
The NSE’s flagship NSE20 share index also took a hit, falling by 5.5%, from 1,752.43 points in early April to 1,656.50 points by the end of June.
“The fluctuations we observed in market capitalisation over the quarter were largely influenced by varying investor sentiment, driven by both local and global factors,” the report notes.
The quarter was marked by significant volatility, with market capitalisation hitting a high of Sh1.801 trillion and plunging to a low of Sh1.624 trillion.
Despite these challenges, the overall market capitalisation still showed an improvement compared to the same period in 2023, rising from Sh1.666 trillion to Sh1.710 trillion—a sign of long-term growth and resilience in Kenya’s financial markets.
However, the turbulence in the equity market did not deter foreign investors. Foreign participation in the bond market surged by 195%, with the volume of bonds traded climbing to Sh287.6 billion compared to Sh147.405 billion in the same quarter last year.
Foreign purchases outpaced sales, with Sh11.578 billion in purchases against Sh8.6 billion in sales, reflecting continued confidence in Kenya’s fixed-income securities.
Yet, this confidence did not translate fully into the equity market, where foreign investors’ share of total equity turnover decreased from 61% in the first quarter to 34.6% in the second quarter.
This decline, paradoxically, was due to an overall increase in equity turnover, which rose from Sh18.508 billion to Sh29.135 billion, signalling a recovering business environment.
KIPPRA attributed the increase in equity turnover to improving economic conditions and renewed investor confidence, buoyed by a stabilised Kenyan Shilling.
Despite the challenges, the NSE is optimistic about boosting foreign investor participation following the inclusion of five more Kenyan companies in the Morgan Stanley Capital International (MSCI) frontier market indices.
In contrast to Kenya’s struggles, other African markets, such as South Africa’s FTSE All Share Index, Egypt’s EGX30, and Nigeria’s NGSE30, recorded gains during the same period, underscoring the diverse outcomes across the continent’s financial markets.
The latest insights from the Kenya Institute for Public Policy Research and Analysis (KIPPRA) reveal that market volatility, exacerbated by these unrests, played a significant role in the decline.
KIPPRA’s quarterly report indicates a 2.97% dip in the total value of shares traded during the period, with market capitalisation dropping from Sh1.763 trillion to Sh1.710 trillion.
The NSE’s flagship NSE20 share index also took a hit, falling by 5.5%, from 1,752.43 points in early April to 1,656.50 points by the end of June.
“The fluctuations we observed in market capitalisation over the quarter were largely influenced by varying investor sentiment, driven by both local and global factors,” the report notes.
The quarter was marked by significant volatility, with market capitalisation hitting a high of Sh1.801 trillion and plunging to a low of Sh1.624 trillion.
Despite these challenges, the overall market capitalisation still showed an improvement compared to the same period in 2023, rising from Sh1.666 trillion to Sh1.710 trillion—a sign of long-term growth and resilience in Kenya’s financial markets.
However, the turbulence in the equity market did not deter foreign investors. Foreign participation in the bond market surged by 195%, with the volume of bonds traded climbing to Sh287.6 billion compared to Sh147.405 billion in the same quarter last year.
Foreign purchases outpaced sales, with Sh11.578 billion in purchases against Sh8.6 billion in sales, reflecting continued confidence in Kenya’s fixed-income securities.
Yet, this confidence did not translate fully into the equity market, where foreign investors’ share of total equity turnover decreased from 61% in the first quarter to 34.6% in the second quarter.
This decline, paradoxically, was due to an overall increase in equity turnover, which rose from Sh18.508 billion to Sh29.135 billion, signalling a recovering business environment.
KIPPRA attributed the increase in equity turnover to improving economic conditions and renewed investor confidence, buoyed by a stabilised Kenyan Shilling.
Despite the challenges, the NSE is optimistic about boosting foreign investor participation following the inclusion of five more Kenyan companies in the Morgan Stanley Capital International (MSCI) frontier market indices.
In contrast to Kenya’s struggles, other African markets, such as South Africa’s FTSE All Share Index, Egypt’s EGX30, and Nigeria’s NGSE30, recorded gains during the same period, underscoring the diverse outcomes across the continent’s financial markets.
