Nairobi Securities Exchange activity declined in the first quarter of this year with prices of shares traded falling across all counters.
According to a statistical quaterly report by the Capital Markets Authority(CMA), shocks triggered by COVID-19 pandemic sparked off panic selling by foreign investors.
The 20.7 per cent drop in the NSE 20 Share Index mirrors corresponding declines in MSCI World, Emerging Markets and Frontier Market Indices oof 21.4%, 23.9 % and 27.7 % respectively.
According to Mr.Luke Ombara, CMA Director, Regulatory Policy and Strategy, Q1, 2020 review was overshadowed by global shocks triggered by the COVID-19 pandemic.
He says in the quarterly review that Kenya was no exception to the ensuing financial contagion, with the first announcement of COVID-19 cases resulting in the NSE 20-share index shedding over 5%, prompting a market halt, sparked-off by panic selling in an already bearish market.
Between January and March this year, there was a decline in secondary equities market performance, with notable decline in prices of listed shares in the tourism, transport, manufacturingand agricultural sectors.
Equity turnover stood at KSh43.70 Billion, compared to KSh.45.01 Billionregistered in Q4.2019, even as volume of shares traded rose by 5.45% to 1.36 billion.
Market capitalization recorded a 7.94% decrease to KSh. 2.02 Trillion.
” It is noteworthy that recent upgrades to market infrastructure at the NSE and the CDSC as well as enhanced trading accessibility through technology, played a major role in sustaining high trading volumes in the NSE, even in the adverse COVID-19 environment,” said Ombara.
In the primary debt market, a quarterly analysis indicates that in Q1. 2020, six Treasury bonds were issued, with the Government seeking to raise KSh150 Billion; receiving subscriptions worth KSh147.61 Billion and accepting KSh. 114.53 Billion, reflecting a 77.56% acceptance rate.
In the secondary market, bond turnover increased by 48.39% with KSh.157.98 Billion worth of bonds traded compared to KSh. 106.46 Billion traded in Q4. 2019, a pointer towards a shift by investors to safer assets.
The derivatives market, likewise, performed relatively well with 302 contracts traded, reflecting a 47.32% increase over the 205 contracts traded in q4 2019, with KCB Group Futures the most liquid with 138 contracts, followed by Safaricom with 47 contracts. Other contracts traded included Equity Bank, Absa Bank, British American Tobacco and the NSE 25-Share index Futures.
” Outlook for the quarter is stable buoyed by a mix of risk management interventions being undertaken to mitigate against identified exposures; good corporate results in selected counters; opportunities for diversification of portfolios across asset classes such as the Absa Gold ETFs, Real Estate Investment Trusts (REITs) based on long-term investment horizons, capital preservation strategies and renewed appetite for Treasury bonds,” said Mr Ombara.
How the NSE performs will, however, depend on how the Government uses its fiscal and monetary tools to cushion the most vulnerable businesses and individuals, especially the low-income earners and boost investor confidence.
This quartely statistical data shows that in Q1, 2020, bond market turnover increased by 48.34% withKSh.157.26 Billion worth of bonds traded compared to KSh. 106.46 Billion traded in Q4. 2019.
A further comparison of Q1.2020 bond turnover with Q1.2019 indicates a 2.28% decrease from Kshs161.61 Bn recorded in Q1.2019 to Kshs. 157.26 Billion recorded in Q1.2020.
There were no equity Initial Public Offers (IPOs) during the quarter under review.There were also no listings by introduction, rights issues, bonus issues or stock splits between January and March this year.
National Bank of Kenya, Deacons, ARM Cement and Mumias Sugar remained suspended during Q1, 2020.
Equity turnover for Q1.2020 stood at KSh. 43.70 Billion, compared to KShs. 45.01 Billion registered in Q4.2019; a 2.91% decrease confirming a decrease in trading activity at the bourse during the quarter.
End of quarter Nairobi Securities E market capitalization recorded a 7.94% decrease to KSh. 2,016.06 Billion registered in Q1. 2020 from KShs. 2,189.98 Billion in Q4. 2019.
Volumes traded increased by 5.45% to 1,360.48 Million in Q1. 2020 compared to 1,290.12 Million in Q4. 2019.
During Q1.2020, bond market turnover increased by 48.39% with KShs.157.98 Billion worth of bonds traded compared to KShs. 106.46 Billion traded in Q4. 2019.
This indicates a significant rebound in market activity in the bourse in the review period.
Equity turnover for Q1.2020 stood at KSh. 43.70 Billion, compared to KSh. 45.25 Billion registered in Q1.2019; a 30.94% decrease confirming a decrease in investor participation at the bourse.
Volumes traded also decreased by 4.90% to 1,360.48 Million in Q1. 2020 compared to 1,430.52Million in Q1. 2019.
All Share Index and the NSE 20 Share Index similarly recorded decreases of 16.33% and 30.94% respectively compared to Q1.2019 closing the quarter at 131.92 points and 1,966.12 points respectively.
Bond Market turnover at Nairobi Securities Exchange for Q1.2020 stood at KSh. 157.98 Billion, compared to KSh. 158.07 Billion registered in Q1.2019; registering a 0.06% decrease.
Safaricom remains the most capitalised at an average of KSh 1,132.52 at close of Q1, 2020 followed by Equity KSh 162.52 billion, EABL KSh 147.08 billion, KCB KSh 141.41 billion, Co-op Bank KSh 81.45 billion, Stanchart KSh 66.01 billion, Absa Bank KSh 65.36 billion, NCBA KSh 48.73 billion, BAT KSh 44.60 billion and I&M Holdings KSh 42.93 billion.
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