Investors at the Nairobi Securities Exchange (NSE) lost Sh294 billion in a month following a sell-off by foreigners that has pulled down the value of the bourse to a 20-month-low attributed to current global trends.
The market capitalisation at NSE dropped to Sh2.176 trillion on Friday after a steady fall that started on April 13 when the bourse’s value stood at 2.471 trillion.
Analysts attributed the exit to the latest hike in interest by the U.S as the Fed Reserve raised its benchmark interest rate by half a percentage point, to a range of 0.75% to 1% which has made dollar investments more attractive, dimming the appetite for riskier assets in emerging markets.
“It is mostly being driven by global trends, with the higher US interest rates driving high-risk rating for countries like Kenya and lower prices for equities. Even in the Eurobonds, we are seeing higher rates. Fundamentally most companies are doing well posting good results and paying dividends. Despite that, foreigners are still selling.” said Eric Musau, a research analyst at Standard Investment Bank (SIB) as quoted by Business daily.
Major stocks at NSE such as Safaricom, East Africa Breweries Limited (EABL), Cooperative Bank, Equity and KCB Group led in shedding value in the wake of the sell-off.
Safaricom, accounted for 71.4 per cent or Sh210 billion of the paper loss, underlining its dominance that is making it difficult for investors to gauge the performance of the bourse.
The telecommunications operator last week announced a dividend payment of Sh30.04 billion after an earlier interim payout of Sh25.6 billion despite a 1.7 per cent drop in net profits.
