Stock market earns investors highest returns in 2013

The stock market outdid other asset classes in returns in 2013. BD Graphics

By GEORGE NGIGI, gngigi@ke.nationmedia.com


IN SUMMARY
The NSE earned investors a 19 per cent return on average while buyers of government debt could only
manage an 8.2 per cent interest and those in term deposits 6.6 per cent.
With inflation at 5.7 per cent on average through the year, it means only equities gave investors double-digit margins in real terms, growing their wealth faster.

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The stock market outdid other asset classes in returns last year, leaving investors who opted for fixed deposits and Treasury papers at least two times worse off.

The Nairobi Securities Exchange (NSE) earned punters a 19 per cent return on average while buyers of government debt could only manage an 8.2 per cent interest and those in term deposits 6.6 per cent, slightly higher than in real estate at six per cent.

“The best performing asset class in 2013 was equities as in 2012. This has been an Africa-wide phenomenon and I forecast equities will make it three years in a row,” said Rich Management chief executive officer Aly-Khan Satchu.

With inflation at 5.7 per cent on average through the year, it means only equities gave investors double-digit margins in real terms, growing their wealth faster.

Investors’ wealth at the stock market, which is measured by market valuation of all the companies listed on the stock market, increased by Sh650 billion during the year to close at Sh1.92 trillion.

The NSE 20 share index — the benchmark used to gauge the market performance — is currently at 4,926.97, a 19.2 per cent increase from its year opening level.

“The easy monetary policy held by foreign countries allowed for liquidity, boosting foreigners’ participation. The elections kept the market down making it attractive,” said ABC Capital manager for corporate finance advisory Johnson Nderi.

READ: Big ticket investors defy tough year to grow wealth

Of the 60 companies listed on the bourse only six closed the year trading at lower prices than those recorded a year ago.

Foreign purchases up to November, according to NSE data, stood at Sh86.7 billion with Safaricom, Equity, KCB and EABL touching all-time highs during the year.

Among the key gainers were Safaricom’s 600,000 shareholders who braved a five-year depreciation that saw the stock reach a low of Sh2.50, half the listing price in 2008, before bouncing back to a high of Sh11 this year.

Centum Investments, which acquired pension fund managers Genesis Investment and is part of the ongoing bidding war over Rea Vipingo, was also vibrant as were underwriters Britam and Pan Africa Insurance.

The bourse’s strong performance will see it finish among the top three best performing markets in Africa, only behind Ghana and Malawi.

Investors in unlisted shares also reaped good benefits as businesses rebounded in the wake of a peaceful change of government after the March 4 General Election.

“Those who have private equities, especially those on the path to listing such as Family Bank and UAP, have also done well with share prices almost doubling,” said Stanlib Kenya chief investment officer Anthony Mwithiga.