Most of them sought for stable returns amidst increased volatility in other securities during the pandemic.
Investors at the Nairobi Securities Exchange (NSE) traded a record Sh690 billion in Treasury bonds last year, as uncertainty arising from the Covid-19 pandemic drove many from the equities market.
Latest Capital Markets Authority (CMA) data indicates that the total value of bonds from the government and private sector stood at Sh691.7 billion last year, a Sh40 billion increase from the figure recorded in 2019, and an all-time high.
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“Domestic institutional investors increased their allocation to Treasury bonds as they sought for stable returns amidst increased volatility in other securities during times of uncertainty,” said the CMA in the report.
Between October and December 2020, the government issued six Treasury bonds seeking to raise Sh130 billion but received subscriptions worth Sh149 billion, an indication of strong demand among investors.
However, corporate bonds performed poorly as many listed companies struggled to weather the disruption the pandemic caused on operations and revenues.
“As at September 31, 2020, the total outstanding amount of issues was Sh21.9 billion, representing a 24.2 per cent decline from Sh28.9 billion reported in the previous period,” said the CMA.
Last year, Centum Investment real estate subsidiary issued a Sh4 billion note with a Green Shoe Option of Sh2 billion as the company raised funds to complete various housing projects.
The equities markets also reported a decrease in investor activity, particularly in the last quarter of last year.
“Equity turnover for the fourth quarter of 2020 stood at Sh27.5 billion compared to Sh45 billion registered over a similar period in 2019, a 38 per cent decrease confirming a decline in investor participation at the bourse,” said the CMA.
Towards the end of the year, foreign investors eased the panicked selling witnessed at the onset of a pandemic.
According to the CMA, foreign investors sold Sh2.6 billion worth of securities in the fourth quarter of the year, compared to Sh11.1 billion in February and March this year.
Market capitalisation, however, fell eight per cent to Sh2.336 trillion at the end of last year, compared to 2.539 billion recorded as at December 2019, with the volume of shares falling by 24 per cent over the same period.
CMA says high market concentration continues to be a going risk, with the top five companies at the bourse accounting for 77.7 per cent of market capitalisation, up from 74.3 per cent at the beginning of the year.