The value of stocks listed at the Nairobi Securities Exchange (NSE) went down by Sh200 billion in the course of 2020 owing to Covid-19 jitters.
The uncertainty created by the pandemic resulted in the mass exit of foreign investors from the market.
The market suffered its worst drop in March when Kenya announced the first positive case of coronavirus.
According to a new Capital Markets Authority (CMA) report, the market capitalisation went down Sh125 billion on March 10, the largest single-day decline in NSE’s history, which saw the bourse suspend trading for the day.
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The report shows the total worth of stocks listed at the Nairobi bourse came down to Sh2.34 trillion at the end of last December from Sh2.54 trillion in December 2019.
The market, however, appears to have made a modest recovery, with December’s Sh2.34 trillion capitalisation being higher than the Sh2.02 trillion recorded in March.
“Equities market recorded a market capitalisation of Sh2.34 trillion as of December 31, 2020 compared to Sh2.54 trillion recorded in the corresponding period a year ago, indicative of an overall Sh200 billion erosion in investor net-worth,” said CMA in the report.
“It should, however, be noted that the Sh2.34 trillion is a Sh320 billion gain from the drop of Sh2.02 trillion recorded at the onset of Covid-19 in March 2020, which was also the lowest monthly market capitalisation, as well as a Sh209 billion rise compared to the third quarter 2020, reflecting the resilience of the Kenyan capital markets.”
During the period to December, foreign investors sold off more than they invested at NSE, with net foreign outflow hitting Sh28.63 billion, which is in comparison to a net foreign inflow of Sh1.28 billion in 2019.
The benchmark NSE 20 share index declined by almost 30 per cent.
“The NSE-20 index closed the year at 1,868.39 points, a 29.6 per cent drop from the 2,654.39 points recorded at the beginning of the year, as both local and foreign investors shifted their investments away from listed equity to other investments, seeking to mitigate against the declining value of their portfolios,” said CMA. The report also noted that there was increased participation in other asset classes, including government securities.