Stocks lose political resilience to bleed Sh63 billion ahead of polls

Nairobi Securities Exchange trading floor. Traders have suffered unrealised losses of Sh63 billion in four days. [Beverlyne Musili, Standard]

Traders at the Nairobi Securities Exchange (NSE) have suffered losses of Sh63 billion in four days as the bourse went on a losing streak for fifth straight week.

Thursday trading saw the bourse’s market capitalisation, a measure of investors’ wealth, drop to Sh2.26 trillion. This level was last seen 14 weeks ago on July 20.

“The market value settled at Sh2.26 trillion compared to Sh2.33 trillion posted last Friday; this represented Sh63 billion decline in market value,” NSE said in end of week report.

Activities at the securities exchange have been masked by street protests, sharp political exchanges and reports of a divided electoral body that have amplified the uncertainties in business environment ahead of next week’s polls.

On Thursday, Kenya National Chamber of Commerce and Industry said the NSE performance pointed to the sensitivity that investors have to the business environment.

This week’s performance signals a market that has now lost resilience that it displayed during the August polls when it averaged Sh2.43 trillion. It was during the same period that it posted a high of Sh2.54 trillion.

At the same time, NSE 20 index, which tracks the top 20 stocks on the bourse, has also lost its footing. On Thursday, it closed the week at 3,543 points having shed 82.63 points or 2.28 per cent.

All share index, which monitors all the listed counters’ performance also dropped by 2.7 per cent to 154.93 points. At this level, shares have touched 14-week low since all share index touched 154.19 on July 19.

Kenya National Chamber of Commerce and Industry said the NSE performance pointed to the sensitivity that investors have to the business environment.

Blue chip companies, which usually attract many foreign investors are also feeling the heat. On Thursday, Equity Bank, Safaricom, Kenolkobil, Jubilee Insurance and NIC bank recorded the highest investor selling.

Latest report from Capital Markets Authority (CMA) shows that foreign traders have been slashing their participation on the bourse.

Compared to the Sh34.2 billion foreign investor sales in three months to September, shares worth Sh23.1 billion were purchased, leading to a net foreign equity outflow of Sh11.1 billion.

In addition, foreigners, who ordinarily command the activities on the Nairobi bourse cut their participation to an average of 54 per cent.

Investors have been favouring bonds at least for the three months to September. During that period, bond performance was up by 44.6 per cent as turnover shot to Sh108 billion from Sh74 billion in a similar period last year.

According to CMA Director of regulation Luke Ombara, making prediction on how the market will fare in the last three months of the year is difficult.