Poor trading activities at the Nairobi Securities Exchange saw investors incur a year on year loss of Sh420 billion in paper wealth, the latest quarterly bulletin by Capital Market Authority shows.
According to CMA Q4 2018 statistical bulletin, the bourse recorded market capitalization of Sh2.1 trillion in three months to December last year compared to same period in 2017 where it posted an impressive Sh2.52 trillion.
Luke Ombara, director regulatory policy and strategy at CMA attributed the slowness to high foreign outflows brought about by volatility in international trade.
“The growth in US economy and increase in Federal Reserve Rate attracted high value investors from emerging markets. US trade wars with China and Brexit uncertainties affected saw investors develop cold feet,’’ Ombara said.
This saw the country record a net foreign portfolio outflow of Sh6.67 billion during the quarter under review compared to net inflow of Sh182 million witnessed same period in 2017.The Annual net foreign portfolio flow for 2018 was an outflow of Sh22.96B compared to a net inflow of Sh11.53 billion in 2017 attributed to foreign investor flight from the local capital markets.
He added that Kenya’s stock market demonstrated more resilience compared to her African peers with equity market turnover in 2018 improving slightly by 2.36 per cent to post Sh175.6 billion compared to Sh171.61 billion traded in corresponding period in 2017.
Last year, NSE recorded the lowest results in five years with benchmark NSE20 sliding from 5,113 points in 2014 to 2,801 points, a whopping 45.12 per cent drop.
Consequently, a total of 6.3 billion shares were traded at the bourse last year, signaling a 10.33 per cent decline compared to 7,065.36 Million traded in 2017.
Calmness in domestic economy saw the bond market grow 27.9 per cent with bonds worth Sh557.72 billion traded in 2018 compared to 435.89 billion the previous year.
The capital market regulator attributes this growth to foreign investors’ entry into the bond market as they sought to divest cash from their equity portfolios.
The bond turnover for Q4 2018 increased by 32.6 per cent, with Sh89.12 billion worth of bonds being traded, compared with Sh118.17 billion in 2017.