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Bonds boost NSE as investors shy away from equities

BUSINESS
By Frankline Sunday | October 22nd 2021

An employee makes notes inside the Nairobi Securities Exchange Ltd. (NSE), Nairobi. Dec. 8, 2015. [Courtesy/ Bloomberg]

Investors at the Nairobi Securities Exchange (NSE) bought Treasury bonds worth Sh301 billion between July and September this year as the uncertainty around the Covid-19 pandemic drove many away from the equities market.

The latest quarterly statistics report from the Capital Markets Authority (CMA) indicates that the value of bonds traded at the bourse increased by 32 per cent compared to Sh227 billion over a similar period last year.

This included a 21-year infrastructure bond floated by the Central Bank of Kenya (CBK) that recorded a 201 per cent oversubscription, with the country one of only a handful in Africa to venture into the debt market during the pandemic.

“The listing of the same tax-free bond in the secondary market also attracted investor interest, with September 2021 recording the highest bond turnover of Sh118 billion in the first nine months of this year,” said CMA chief executive Wyckliffe Shamiah.

The volume of shares traded stood at 316.9 million as at September 2021, a 37 per cent drop from 524.5 million during a similar period last year.

However, the latest market data form the CMA indicates a higher level of optimism in the equities market compared to last year, as investors reacted to reports of increased Covid-19 vaccination efforts, reduced infections as well as gradual resumption of activity in some sectors.

Foreign investors sold off Sh2 billion in equities in the nine months to September, compared to Sh25.9 billion recorded in the same period in 2020 spurred by panic selling in the first three months of the pandemic.

Market capitalisation at the NSE stood at Sh2.7 trillion, an 19 per cent increase compared to last year and the highest in more than 10 years.    

Safaricom led in equity turnover, with an average of Sh5.1 billion worth of shares traded during the quarter.

 

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