‘Nation’ stock trade pushes turnover at NSE to new high

A broker trades at the NSE. The stock market turnover for the first half of 2013 stood at Sh73.3 billion. FILE 

By CHARLES MWANIKI,

In Summary

• NSE turnover in August rose by 86pc to Sh21bn compared to July’s Sh11bn.
• Previously, the highest monthly turnover at the NSE was Sh16 billion, achieved in May this year and August 2010.

The Nairobi Securities Exchange (NSE) monthly turnover hit a historic high last month largely on account of Nation Media Group’s stock transaction, setting the stage for 2013 to become one of the most active years for the bourse.

Data released by NSE shows turnover in August rose by 86 per cent to Sh21 billion compared to July’s Sh11 billion, with the main catalyst being a one-off Sh6.1 billion block trade of NMG shares.

Previously, the highest monthly turnover at the NSE was Sh16 billion, achieved in May this year and August 2010.

“The main movers were NMG (Sh6.1 billion), Safaricom (Sh2.8 billion), East Africa Breweries Ltd (Sh2.6 billion), KCB (Sh2.5 billion), Equity Bank (Sh1.8 billion) and BAT (Sh1.5 billion).

Foreign investors heavily traded in these counters leaning on the ‘buy’ side (Sh15 billion),” said NSE. The bourse said that the vibrant trading was a reflection of increased investor confidence in the Kenyan market.

The total market turnover for equities up to the month of August stands at Sh105.3 billion and has already outstripped the 2012 full-year total of Sh86.8 billion. The market is on course to beat the previous yearly high of Sh110 billion registered in 2010.

The Capital Markets Authority, in its 2013-2017 strategic plan, put the target for a combined bonds and equities turnover at Sh1.04 trillion for 2013, rising to Sh6.83 trillion in 2017.

(READ: Regulator plans to raise NSE’s capital)

The bond and equities combined turnover in the year to August stood at Sh425.76 billion compared with a full-year total of Sh652.5 billion in 2012, Sh523 billion in 2011 and Sh593 billion in 2010.

Market observers have expressed optimism that the last quarter of the year will see a continuation of the upbeat market activity that has driven turnover up, backed by the continued appetite for stocks by foreign and institutional investors.

“The market is still driven largely by institutional investors, both local and foreign, with retail participation beginning to return. Long-term outlook is still quite positive,” said Kestrel Capital chief executive Andre DeSimone. 

Forex traders have also pointed at inflows from the oversubscribed Treasury infrastructure bond issue, which attracted bids of Sh37.63 billion against the Sh20 billion on offer, as a potential source of liquidity to drive up the activity in the NSE bonds market.

The surge in equity market trade volumes has already brought benefits to market players, helping to lift stockbrokers’ half-year profits by double and even triple digits.

Brokerage income

The intermediaries’ financial statements for the first six months of the year revealed wider profit margins, mainly as a result of increased brokerage income, which is derived from trading turnover