Date: 19 January 2017 01:11
The Nairobi Securities Exchange (NSE) is the worst performing market globally year-to-date according to Bloomberg, with risk-averse investors shunning stocks for safe-haven government debt.
The chief executive of the NSE Geoffrey Odundo was quoted by Bloomberg saying demand has been limited by a continued wait-and-see attitude by investors amid persistent volatility.
“Because of issues around volatility in the markets, most pension schemes over the past two years have lost value in their equity holdings so they want to play a bit safer. Interest rates have historically given them a better performance so that is why they are willing to buy government paper,” Mr Odundo was quoted by the news service as saying.
He was, however, optimistic things would change even as the country gets into a traditionally market depressing electoral mode.
“We see it bottoming at some point. Foreigners are waiting for better prices and are picking stocks at fairly low prices and this has dragged the index downwards, especially given that when the stocks that really drive volume — which are the telcos and the banking sector — fall, they drag the index down.”
READ: Cash-rich NSE firms take hit from bank interest rates cap
Nine stocks at the NSE are trading at multi-year lows in the current bear market. They are Stanbic Bank, Kenya Power, Athi River Mining, Sanlam, East Africa Breweries Ltd, Centum, Diamond Trust Bank, Umeme and CIC Insurance are trading at lows of between three to 12 years.
Others such as Home Afrika and KenGen are trading at near all-time lows.
The market has been on a slide since March 2015 when it went bearish following the positive returns recorded in the preceding three years.
READ: Investors’ pain continues as NSE index falls to eight-year low
Investors have lost Sh654 billion in paper wealth during the latest bear run, which has seen the main index (the NSE 20 share index) lose 46.3 per cent value to stand at 2,955 points.
Analysts expect equities will be flat this year, weighed down by concerns over the General Election and the US Federal Reserve base rate hike.