NSE listed firms lose 21 percent of value in three months

Companies listed in the Nairobi Securities Exchange (NSE) lost 21 percent of their values in the first three months of the year as the domestic equities market took a hit from the coronavirus pandemic.

New data from the Cytonn Research shows the NSE in bear territory with the Nairobi All Share Index (NASI) NSE 25 and NSE 20 registering declines of 20.7, 24.2 and 25.9 per cent respectively.

“The losses recorded by all the three indices breach the threshold of a bear market which is a condition in which securities prices fall by 20 per cent or more,” notes the Cytonn report.

The NSE losses in the period were led by large cap stocks such as Bamburi, Equity, KCB, BAT, EABL and ABSA who lost values of 40 per cent, 36.5, 35.2 28, 24.7 and 24.5 per cent respectively.

Further, the domestic equities market has remained in the loss territory with the value of listed companies falling by an average 12 per cent in the last one year.

Market turnover has declined by 49.4 percent over the last quarter to Ksh.46.4 billion ($439 million) from Ksh.91.8 billion ($ 867 million) between October and December last year.

Foreign investors at the bourse have remained net sellers in the period with their net selling position standing at Ksh.413 million ($3.9 million) in the last week.

Investors have meanwhile dumped their investments in equities to favour safe havens such as government securities and precious metals with the value of gold for instance rising by over four percent in value over the period to trade at Ksh.168,137 ($1588) an ounce.

“Most investors in the equities market have become net sellers, wiping out any year to date gains as investors move away from the equities market towards fixed income safe havens such as government securities and treasury bonds,” the report added.

Investments in government instruments in emerging and developing economies have however taken a hit from deteriorating economic growth sentiments.

According to reporting by Reuters, the yields on Kenyan Eurobonds has been on the rise from falling demand as investors’ price in the expected economic fallout.

Both the National Treasury and the Central Bank of Kenya (CBK) have already revised their economic growth projection to a low 3.6 and 3.4 per cent respectively with private sector activity in March closing at its lowest in 29 months according to data from the Stanbic Bank Markit Purchasing Managers Index (PMI).

According to data from the Bank of America (BOA), emerging markets have lost about at least one third of their net inflows seen the past four years or an equivalent Ksh.4.9 trillion ($46.7 billion)