Nairobi Securities Market fared well in 2012/13

By James Anyanzwa

NAIROBI, KENYA: The performance of the stock market improved last year helped by increased inflows from foreign investors.

According to Economic Survey 2013, the Nairobi Securities Exchange (NSE) 20 Share Index rose 29 per cent to 4,133 from 3,205 in December 2011, while market capitalisation increased by 46.5 per cent to Sh1.27 trillion, up from Sh868 billion recorded in a similar period the previous year.

Total net foreign portfolio inflow improved with total inflow rising to Sh9.4 billion in the fourth-quarter, up from Sh5.2 billion registered in the preceding quarter, to reflect 82 per cent improvement.

The number of investment banks declined to 10 in 2012, from 11 in 2011.

With regard to stockbrokers, fund managers and custodians, the report indicated their numbers increased by seven, two and one respectively to stand at 12, 21 and 15 respectively.

Interest rate

The financial sector grew slower in 2012 to post a growth of 6.5 per cent in 2012 compared to a 7.8 per cent growth in 2011.

“This growth was on account of high interest incomes for commercial banks, including other bank charges and an increase in branch network and agency banking,” indicated the report.

According to the report, growth in the sector was curtailed by a tight monetary policy in the first-half of 2012 and a relatively slow pace of lowering the lending rates despite a significant drop in the Central Bank Rate (CBR) in the second-half of the year.

The overall domestic credit grew by 20 per cent to Sh1.8 trillion in 2012, up from Sh1.5 trillion in 2011.

Credit to the private sector grew at a slower rate of 11.7 per cent in 2012 compared to 30.8 per cent growth in 2011, mainly on account of prohibitive cost of borrowing.