NSSF loses Sh10 billion to bear run at Nairobi bourse

National Social Security Fund (NSSF). (Photo: Courtesy)

The value of investments by the National Social Security Fund (NSSF) at the Nairobi Securities Exchange declined by a massive Sh10 billion in 2016, attributed to the bear run experienced during the year.

The pensions fund said the value of its stake in different firms listed at the Nairobi bourse dropped by Sh10 billion as the share price of the companies declined.

The biggest losses were experienced in banking counters, including the Kenya Commercial Bank and the National Bank of Kenya.

NSSF’s stake in KCB was valued at Sh10.3 billion by end of its 2014/15 financial year, but according to its annual report released on Friday during its Annual General Meeting, the value fell by Sh4 billion to Sh6.3 billion.

In NBK, the fund had Sh2.8 billion worth of stock in the year to June 2015, but about 50 per cent of the value was wiped out. The value of its investment in the bank dropped to Sh1.4 billion by end of 2016 financial year.

The overall impact was a substantial reduction in return on investment in the year to June 2016. The return went down 90.3 per cent to Sh1.03 billion in 2016 from Sh10 billion in 2015.

Sh100 billion

“Similar to the previous year, the net return on investment continued to decline from Sh10.71 billion in 2015 to Sh1.03 billion in the year 2016 due to a steady decline in activity at the Nairobi Securities Exchange (NSE) which controls a sizeable share of our investment portfolio,” said NSSF in its annual report to members.

There were, however, a few firms whose shares went up, though not enough to offset the losses that NSSF incurred.

These include Safaricom, where NSSF held stocks valued at Sh4.8 billion that grew to be valued at Sh5.6 billion but also where it increased its investments by acquisition of shares worth Sh415 million during the financial year to June 2016.

There was almost a billion shillings in the value of NSSF’s shares in Bamburi Cement, where the fund’s value increased to Sh9.6 billion in 2016 from Sh8.7 billion in 2015.

In the 2016 calendar year, investors at the NSE lost over Sh100 billion after majority of stocks across all counters saw their values eroded as the market sustained a decline experienced in 2015.

Market capitalisation stood at Sh1.93 trillion at the close of 2016, which is in comparison to Sh2.05 trillion at the end of 2015.

“The bourse closed the year with the benchmark index, the NSE 20 share index, losing 21 per cent to settle at 3186.21 points,” said a NSE report earlier this year.

Despite the erosion in the value of its shareholding in different listed firms, NSSF saw its income from dividends as well as interest from other investments grow.

Treasury Bonds

According to its annual report, the fund’s investment income hit Sh13 billion in the year to June 2016, a 10 per cent increase compared to Sh10.9 billion it made in 2015.

This included a dividend income of Sh2.4 billion, which was an increase from Sh2.2 billion earned the previous year.

It also got an interest income of Sh8.5 billion up from Sh6.6 billion in 2015, which is from money loaned to Government through Treasury Bonds and also other investments in areas such as corporate bonds.