VOLATILITY

Investors at NSE lose Sh232bn on coronavirus

The market capitalisation for that day closed at Sh2.2 trillion compared to Sh2.3 trillion on Friday

In Summary
  • NASI, NSE 25 and NSE 20 declining by 9.7, 8.8 and 7.5 per cent respectively.
  • Even so, the number of shares traded and total equity turnover increasing by 28.7 per cent and 18.2 per cent, respectively.
An investor looks at the digital board at the Nairobi Stock Exchange(NSE)/FILE
An investor looks at the digital board at the Nairobi Stock Exchange(NSE)/FILE

Investors at the Nairobi Securities Exchange (NSE) last week lost a whopping Sh232 billion in paper wealth after coronavirus triggered a panic sell.

According to Central Bank’s weekly bulletin, market capitalization on the Nairobi bourse dropped 9.7 per cent to Sh2.16 trillion compared to Sh2.39 trillion the previous week.

The three indices registered a massive drop, with the Nairobi All Share Index.

NASI, NSE 25 and declining by 9.7, 8.8 and 7.5 per cent respectively.

Although NSE, just like other securities exchanges globally has been performing dismally especially after coronavirus started hampering the normal flow of activities especially from China, the Kenyan bourse was the worst hit of Friday as the country recorded first coronavirus case.

The blue-chip counter consisting of top 20 movers at the NSE dropped sharply by 15 per cent, forcing a halt as per Equity Trading Rules which provides that when NSE20 drops by over five per cent at the opening session compared to closing value, trading can be halted for more than 30 minutes.

Almost all counters were blinking red by the time the trading was temporarily suspended with the top five counters of Safaricom Plc, KCB Group, Equity Bank, Cooperative Bank, and Scan Group as most foreign investors in a panic sell.

On Monday, the bourse shed Sh125 billion after foreign investors continued to flee blue-chip firms over the coronavirus, making it the single largest drop in a day at the bourse’s history.

The market capitalisation for that day closed at Sh2.2 trillion compared to Sh2.3 trillion on Friday, with Safaricom and the big banks leading in shedding value in the wake of the sell-off.

On Friday, Safaricom Plc, for instance, failed to hit the normal above Sh1 trillion market capitalisation, with its share price dropping by 5.44 per cent to Sh24.35. 

KCB Group, on the other hand, managed to move a volume of 6.95 million to hit a market cap of Sh136.9 billion after its share price slide to Sh42.65, shedding Sh3.20 in value compared to Thursday trading. 

The panic also saw Equity Bank, Coop Bank and Scan Group shade 7.1 per cent, 7.02 per cent and 1.3 per cent in share values.

Even so, the number of shares traded and total equity turnover increasing by 28.7 per cent and 18.2 per cent, respectively.

Turnover of bonds traded in the domestic secondary market also decreased by 8.4 per cent during the week.

However, Treasury bills auction were oversubscribed after bids worth Sh63.4 billion were received against an advertised amount of Sh24 billion, representing a performance of 264 per cent subscription. 

In a week characterised by extreme volatility in the international markets, yields on Kenya’s Eurobonds rose by an average of 178.7 basis points compared to a decline of 20 basis points in the previous week.

International oil prices plunged during the week, as a result of the failure by OPEC+ to agree on production cuts and Saudi Arabia’s retaliation with price discounts.

Murban oil price declined to $33.98 per barrel on Friday.