Nairobi bourse listed among worst performers in Africa
By John Otini, December 5, 2022Nairobi Securities Exchange (NSE) has sustained a three-month losing streak, making it one of the worst-performing major stock markets in Africa, hit mainly by foreign investor capital flight.
The NSE is down 23 per cent year to date, meaning that investors have lost 23 per cent of their investments in the last 12 months ago, according to data from Gengis Capital, an investment solutions provider
The top loser
“Kenya shed 1.35 per cent in the week to close as the top loser. Nigeria printed the best performance gaining 6.8 per cent,” the data shows.
Local companies continued to drive activities at the bourse as foreign investors stayed outside, perhaps driven by high interest rates in the United States. “Foreigners were in a net exit position with outsized exits on Safaricom to clock net outflows of Sh1.5billion week-on-week,” Genghis said.
The performance of African stock markets has recently been weighed down by a reduced appetite for emerging markets after a jump in interest rates in the developed markets such as the US, where high inflation forced their central banks to adjust rates upwards.
Kenya has suffered more given that its market is dominated by foreigners –– who account for 55 per cent of turnover – and the lack of restrictions on moving foreign exchange in and out of the country compared to African peers.
At the NSE, Kakuzi has been the best performing since last week with Express Kenya being the largest gainer yesterday as Crown Paints endured heavy selling.
Investors ignored key corporate actions such as the announcements of Sh3.2 billion dividend by KCB Bank and share buyback by Centum alongside major profits announced by banks to stay out of the market.
“Investors with bearish sentiment drove activity as signaled by benchmark indices week-on-week performance. Foreigners exerted their dominance accounting for 58 per cent of market activities while maintaining a bearish position across major stock,” Genghis said.
Genghis data shows that countries that have commodity exports such as Nigeria, Zambia and Botswana were the best performing as their exchange rates remained resilient.
The market has been on a downward trend since October last year to hit its lowest in June to July this year before rising on account of a peaceful transition. The market has, however, taken another nose dive.
Bear market rally
“Cracks in the latest bear market rally widened with the market remaining bearish for the second consecutive week,” said Genghis in an update. The low performance comes even as the government says it will be raise funds for development through the stock market raising concerns on whether this will be the ideal time to float the companies.
Countries whose currencies have been hit most and which do not export major minerals like oil and metals have seen the highest dollar outflows from their exchanges.