Investor wealth at the Nairobi Securities Exchange (NSE) sunk to a ten-year low on Thursday with the market capclosing under Sh1.4 trillion.

Thursday’s trading session closed at Sh1.399 trillion in what marks the first time in over a decade that the market cap at the NSE has fallen below the Sh1.4 trillion threshold, with the last instance occurring on February 4th, 2013, when it closed at Sh1.398 trillion.

The decline in market capitalization has been a cause for concern among investors and market participants.

Dip in investor wealth

Year-to-date figures reveal a staggering drop in investor wealth, with approximately Sh587.0 billion wiped off the books.

“Over the last 7 days, the market has dropped 3.9 per cent, driven by a decline of 9.3 per cent in the communication services sector. As for last year, the market is also down 31per per cent,” notes simplywall.st in its analysis of the market.

The dip has raised questions about the performance of Kenya’s stock market, simplywall.st estimates that earnings are forecast to grow by 8.5 per cent.

Apart from global shocks, experts say that the market’s recent woes can be attributed to a combination of factors, including economic uncertainties, regulatory changes, and shifting investor preferences.

Many investors are beginning to redirect their funds away from equities and towards safer assets, such as Treasury bills. This t highlights a growing trend where investors are seeking refuge in less volatile markets as a response to the NSE’s turbulence.

“Turnover increased by 8 per cent to Sh166 million up from Sh153.7 million the previous trading day… Foreign investors turned bearish on key blue chips to print net outflows of Sh 26.59 million in the day,” noted Ghenghis Capital in its barometer.

Treasury bills considered a relatively safer and more stable investment, have become an attractive alternative to riskier equities in this environment.

The government’s thirst for cash has led to high rates on Treasury bills and bonds.

The stability and predictability of government securities are drawing in risk-averse investors who are looking for a guaranteed return on their investments. Some of the most affected counters include Safaricom, KCB, KPLC, Kenya Airways and many others.

Safaricom was the most active counter accounting for 51 per cent of market activities as sellers outweighed buyers.

“Safaricom was the day’s biggest mover with 6.5 million shares valued at Sh85.7 million changing hands at between Sh12.40 and Sh12.70,” said the NSE in the daily update.