Trading at NSE up 70% on strengthening shilling - CMA

The bourse is targeting Sh6.6 trillion market cap by 2028.

In Summary
  • It recorded a 27.5% drop in paper wealth worth Sh547 billion.
  • The Nairobi bourse closed the last trading day of the year with Sh1.44 trillion
An investor looks at the digital board at the Nairobi Securities Exchange/FILE
An investor looks at the digital board at the Nairobi Securities Exchange/FILE

The strengthening shilling has seen trading activities at the Nairobi Securities Exchange (NSE) emerge from a deep bear run to increase trading activities by 70 percent in just two months. 

The Capital Markets Authority (CMA) is now optimistic that the bourse will hit an aggregate market capitalisation of Sh6.6 trillion in the next five years if the current trend persists.  

"In the short time that the Kenya shilling has appreciated, trading on the Exchange has increased 70 per cent and the NSE is now ranked as one of the best-performing Exchanges,'' CMA chairman Ugas Mohamed said.

Last year, NSE recorded a 27.5 per cent drop in paper wealth worth Sh547 billion as the multi-year bear run hurt investors' portfolios, largely on a weak shilling that had sunk to an all-time low of Sh165 units to the US dollar. 

The Nairobi bourse closed the last trading day of the year with Sh1.44 trillion market capitalisation compared to Sh1.98 trillion the previous year. 

In a media address after the unveiling of the 2023-28 strategic plan, CMA CEO Wycliffe Shamiah thanked the government for coming up with innovative strategies to stabilise the shilling. 

He revealed that investor wealth at the bourse has increased by Sh327 billion since January 2, 2024, while the Nairobi all-share index has marked a 22.7 per cent jump since December 29, 2023.

"This is no mean task. International Portfolio Investors have begun relooking at our market and we note BlackRock's decision to reinvest at NSE after a four-year break, which marks a significant milestone,'' Shamiah said.

He also hailed the Nairobi bourse after the FTSE Rusell Policy Advisory Board upgraded from a “FTSE Rusell Policy Advisory Board upgrading the NSE from a “restricted” status to a “pass” status.

FTSE Russell's market cap-weighted equity indexes, including the flagship FTSE Global Equity Index Series (FTSE GEIS), FTSE UK Index Series, and the Russell US Indexes, are widely used by investors worldwide for asset allocation decisions, portfolio construction, and risk and performance analysis.

On Monday, the shilling was trading 127 units against the greenback. 

He also praised Kenya's effort to integrate African markets through the African Exchanges Linkage Programme (AELP), which he says will open Kenya's market to other African countries with a combined market capitalization of over $1.3 trillion.

The industry has been pushing for investor inclusion, especially through the development of platforms like Dosikaa and DhowCSD.

These initiatives help democratise access to financial information and investment opportunities, empowering a broader segment of the population to participate in the capital markets.

According to CMA, the new strategy is crafted to change all these and invigorate economic growth, attract investments, and align with local and global priorities.

"The strategy is to make the capital markets a pivotal source of investments and long-term financing, vital for Kenya’s developmental and socioeconomic well-being."

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