VOLATILITY

Coronavirus wipes out gains at the NSE

In Summary
  • According to the Q1 2020 CMA Statistical bulletin, the NSE 20-share index shed over 5 per cent, prompting a market halt, sparked-off by panic selling in an already bearish market.
  • Equity turnover stood at Sh43.70billion, compared to Sh45.01 billion registered in Q4.2019, even as volume of shares traded rose by 5.45 per cent to Sh1.36 billion
CMA policy and strategy director Luke Ombara during a roundtable briefing in Nairobi on November 14,2017. Photo/Enos Teche.
CMA policy and strategy director Luke Ombara during a roundtable briefing in Nairobi on November 14,2017. Photo/Enos Teche.

Global economic shocks triggered by the coronavirus pandemic sparked major drops at the Nairobi bourse, according to the latest review by the regulator. 

According to the 2020 first quarter Capital Markets Authority  Statistical Bulletin, the NSE 20-share index shed over 5 per cent, prompting a market halt, sparked-off by panic selling in an already bearish market.

In March, investors at the Nairobi Securities Exchange (NSE) lost Sh232 billion in paper wealth after the first case of coronavirus in the country triggered a panic sell.

 
 

This led to a halt in trading at the NSE as the All Share index fell 15 per cent, wiping out Sh120 billion off investors’ portfolios.

“The 20.7 per cent drop in the NSE20-Share Index witnessed in the quarter mirrored the corresponding declines in MSCI World, Emerging Markets and Frontier Market Indices of 21.4, 23.9 and 27.7 per cent respectively, albeit at a lower rate,” said Luke Ombara , CMA's Director, Regulatory Policy and Strategy.

The January- March period witnessed a decline in secondary equities market performance in comparison to October-December quarter across various indicators, with a notable decline in prices of listed shares in the tourism, transport, manufacturing, and agricultural sectors.

Equity turnover stood at Sh43.70billion, compared to Sh45.01 billion registered in Q4.2019, even as the volume of shares traded rose by 5.45 per cent to Sh1.36 billion.

End of quarter market capitalisation recorded a 7.94 per cent decrease to Sh2.02trillion.

 

"The markets have however started regaining stability due to various fiscal and monetary policy interventions by the Kenyan government and financial Sector Regulators," said Obara.

 

According to the latest CBK weekly bulletin,the NASI and NSE 20 share index increased by 2.2 percent and 0.1 percent, respectively, during the week ending April 23.

“The equity turnover and the number of shares traded also increased by 173.0 percent and 148.3 percent, respectively, following a longer trading week,” CBK said in the bulletin.

In the last quarter of 2019, Investors at the Nairobi Securities Exchange (NSE) gained Sh350 billion in paper wealth as the country experienced economic stability .