BEAR RUN

NSE top index sinks to a new year low

In Summary

•The poor performance of the top counter saw investors lose Sh142 billion in paper wealth.

• According to the CBK Weekly bulletin, all indices at the NSE dropped, an indication that the bear run that has following the Nairobi bourse since last year is still active.

NSE chief executive Geoffrey Odundo monitors the daily tradings at the NSE headquarter on August 22 / ENOS TEC
NSE chief executive Geoffrey Odundo monitors the daily tradings at the NSE headquarter on August 22 / ENOS TEC

The NSE 20 Index that tracks the performance of top 20 counters at the Nairobi bourse slid to a new year low to close the week at 2663.45 having shed a whopping 119.16 points.

The poor performance of the top counter saw investors lose Sh142 billion in paper wealth, with the market capitalization sinking by 6.13 per cent to 2.18 trillion compared to Sh2.32 trillion posted in the previous week.

According to the CBK Weekly bulletin, all indices at the NSE dropped, an indication that the bear run that has following the Nairobi bourse since last year is still active.

"The NASI, NSE 25 and NSE 20 share price indices as well as market capitalization declined by 6.11, 7.61, 4.28 and 6.13 percent, respectively,’’ CBK said.

Even so, the total number of shares traded increased by 23.9 per cent while equity turnover rose by 39.54 per cent during the week ending May 16.

The lead index has been on the downwards trend since last year when it closed the below 2800 points after shedding 25 per cent in value. The bourse in general lost Sh800 billion in market capitalization to close the year at Sh2.1 trillion from a high of 2.9 trillion.

The poor financial showing of publicly quoted companies became apparent when 15 companies trading shares on the Nairobi Securities Exchange issued profit warnings for the 2018 financial year.

The Capital Market Authority (CMA) expects poor performance to persist to 2021.

“The reported slowdown in performance of listed companies is likely to affect the performance of capital markets in the short to medium-term,” CMA said in its latest Capital Markets Soundness report for quarter one that was released last week.

Even so, the regulator said that the equity turnover for Q1 2019 rose to Sh45.25 billion compared to Sh35.43 billion in the previous quarter, indicating a 27.72 per cent increase.

The market capitalization for the quarter rose 12.3 per cent to hit Sh2.36 trillion compared to Sh2.10 trillion recorded in the previous quarter ended December last year.

The volume of shares traded during the quarter under review also increased by 6.59 per cent to 1.61 billion compared to 1.57 billion shares in Q4 2018.

Other composite indicators such as the NSE All Share and NSE 20-Shares index similarly recorded increases of 0.46 per cent and 12.72 per cent closing the quarter at 157.66 points and 2,846.99 points respectively.