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Bleak future as Kenyan investors lose Sh153 billion at bourse in just 17 days

By Patrick Alushula | January 26th 2017
Bloomberg graph tracking the performance of the NSE 20 Share Index from last year.

Investors at the Nairobi Securities Exchange (NSE) may be in for another disappointing year as the bourse continues to drift into dismal records.

In just 17 days of trading in 2017, the bourse has wiped out investors’ paper wealth amounting to a staggering Sh153.5 billion.

Yesterday, the NSE 20 index, which keeps tabs on the performance of top 20 stocks, sank to another low of 2,855.81 points making 15 out of 17 trading sessions that the index has lost points.

At this level, the index is almost half the all-time high of 5,499.64 points recorded in March 2015. Last week, tracking by international media outlet Bloomberg, said the valuations of all the 64 stocks were at their weakest level ever in eight years.

Since the NSE20 index opened the year with a gain of 20.03 points to 3,206.24 points, it has not afforded even a fifth of that climb again. In just 17 trading sessions, investors’ return has sunk into negative.

According to an analysis by head of banking research at Ecobank Capital, George Bodo, just one stock out of the 20 listed in the index has maintained its pricing between the start of first week of 2017 and beginning of this week.

Only British American Tobacco has remained unchanged, while stocks such as Nation Media Group, Barclays Bank of Kenya, Equity Bank, Athi River Mining, KenolKobil, Kenya Power, Britam and Centum have all shed value by double digit percentage points. From a negative 17.91 per cent return on investment in 2016, the last 17 sessions of trading in 2017 have been disappointing.

If all the investors in the 20 blue chip companies sold off their shares, they will get another negative return of over nine per cent.

According to Standard Investment Bank head of research Francis Mwangi, most stocks that posted negative returns last year have continued on the same trend this year.

“Foreign investors are still dominating the market. Most investors are being conservative because they do not know the direction the share prices will take. This may be due to elections, currency movement and because of the banks’ poor performance,” said Mwangi.

However, he says that at an average of 400 million shares moved every day, the level is still decent.

A compilation by The Standard of the daily reports from NSE shows that NSE20 index rose only on January 3 (+20.03 points) and January 18 (+3.10 points), while the rest of the trading sessions have seen major drops in the index including yesterday when it shed of 17.21 points.

By the first week of the year, the index had lost 147 points even as the second week built on this poor performance to erode a further 168.11 points or 5.36 per cent.

The index is used to measure the prevailing conditions on the market and therefore a drop indicates that the share price for most stocks is undergoing a beating.

Despite the index rising once last week, it would prove a weak rally as the index fell below the psychological level of 3,000 points on Monday 16. It closed the day at 2955.44 points. With this, it surpassed the level last seen in 2010. In securities market, a market psychological level is the overall sentiment or feeling of the market at a particular time. This is mostly based on future expectations formed by investors.

Explaining his market outlook for 2017 to The Standard, Alexander Forbes CEO Sundeep Raichura said he expects the jitters around elections to make investors shy away from listed equities unless those patient enough to take long-term positions.

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