The Capital Market Authority (CMA) has released the second quarter market performance report. The report shows that the Kenyan economy expanded by 5.6% from 6.5% in the corresponding quarter of 2018. This growth was mainly supported by the service sector as well as wholesale and retail trade, transportation, accommodation, food services, financial and insurance services. There was a slowdown in agricultural activities following delay in the onset of long rains. The inflation rate stood at 5.70% in June 2019. The Consumer Price Index decreased by 0.69% from 205.77 in May 2019 to 204.34 in June 2019.
In the equity markets, the bulletin indicates that market capitalisation has decreased to ksh2,278.9 billion compared to ksh2,360.52 billion in Q1 2019. Equity turn over also decreased from ksh45.25 billion reported in the previous quarter to ksh 32.89 billion registered in Q2 indicating a decrease in participation of investors in the Nairobi Securities Exchange. Trade volumes dipped by 3.4% to ksh 1,396.67 million compared to ksh 1,081.60 million in Q1 2019. In the second quarter of 2019 there was no listing on the exchange and nor was there a rights issue. Additionally, there were no listings by introduction, no additional offers and no stock splits. There was one bonus issue during the period under review by Kenya Re-insurance Corporation. The following companies remain suspended; Atlas African Industries, Deacons East Africa, and Athi River Mining Cement. Kenol Kobil was delisted in May 2019 after a successful takeover by Rubis Energie.
In the Bond market, six treasury bonds were issued. Goverment sought to raise ksh 140 billion but received a subscription worth ksh 242.07 billion, indicating the high demand in the market for short term government securities. Treasury accepted bonds worth ksh 157.82 billion indicating a 65.20% acceptance rate. The bond market turnover increased by 24.81% with ksh 201.71 billion worth of bonds traded compared to ksh 161.61 billion traded in Q1 2019.
On 29th May 2019, the CMA granted approval to NSE to launch and operate the Derivatives Exchange Market pursuant to the Capital Markets Act and the Capital Markets (Derivatives Market) regulation, 2015. The approval follows from the successful completion of a six month derivatives pilot test phase conducted between July and December 2018 and resolution of key issues that emanated from the test phase.
The derivatives market will initially offer investors equity single stock futures and Equity index futures and later introduce financial and commodities derivatives. The Exchange will initially offer futures contracts on the NSE 25 share index and the Single futures on Safaricom, KCB Bank, Equity Group, East African Breweries Limited, and British American Tobacco. The NSE Derivatives market (NEXT) futures started trading on Thursday July 4th 2019 with the official launch of the market conducted on July 11th 2019.