Poor financial performance in the period ended September by most listed firms saw investors lose Sh364.9 billion in paper wealth, the Capital Market Authority has said.
According to CMA’s Q3 Statistical Bulletin released Friday, performance of the equity market slowed down compared to Q2, with turnover declining 32.27 per cent.
Similarly, market capitalization fell 6.68 per cent to Sh2.21 trillion reflecting an overall decline in investor wealth by Sh 364.9 billion.
“The steep drop in performance in the equities market was in tandem with significant equity portfolio outflows recorded throughout the quarter, attributable to a myriad factors including profit warnings and declining profitability of listed companies,” director regulatory policy and strategy at CMA Luke Ombara said. Other factors listed were post-election inertia, macroeconomic and fiscal policy challenges.
Last month, listed electricity supplier Kenya Power issued a profit warning for the full year ended June 2018, saying earnings are expected to drop by 25 per cent compared to a similar period in 2017.
It blamed the results to depressed economic environment, poor hydrological conditions, prolonged electioneering period and the delayed review of retail electricity tariffs.
In August, CMA suspended listed cement maker Athi River Mining from trading on Nairobi Securities Exchange after the firm was placed under administration over indebtedness.
This was after UBA Bank led other commercial banks in appointing administrators from audit firm PricewaterhouseCoopers to recover Sh15 billion owed by ARM.
The cement maker’s net losses in the year ended last December widened 2.3 times to Sh6.5 billion as short-term liabilities exceeded current assets by Sh13.4 billion.
The Insolvency Act of 2015 gives companies going through financial turmoil an opportunity to put their act together, including settlement of debts.
According to CMA report, general money markets performed poorly during the quarter under review compared to the similar quarter in 2017.
For instance, top 20 companies on NSE shed 23.3 per cent to post 2875.5 points compared to 3751.5 points last year while the Nairobi All Share Index (NASI) dropped 12.5 points to settle at 149.7 points.
Total shares traded dropped by 48.2 per cent to 1.04 billion compared to 2.01 billion traded similar period last year. Equity turnover shrunk 40.04 per cent to Sh31,9 billion compared to Sh53.6 billion in 2017.
There was a slight improvement in primary and secondary bond markets, reflecting the inverse relationship between equities and debt.