Stock market adds Sh186bn to investors wealth in 6 months

Money Markets

Traders on the floor of the Nairobi Securities Exchange. Small and medium-sized counters recorded higher growth than the large ones during the first half of the year. FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• Market capitalisation, the value of all listed stocks, rose 10 per cent to Sh2.01 trillion helped by share price appreciation in key insurance, banking, and telecommunications sectors.
• Small and medium-sized counters, however, recorded higher growth than the large ones as reflected in the contrasting trajectories of the two main indices used to measure performance at the Nairobi bourse.
• The market’s performance was particularly stellar when compared with the returns that investors who put their money in other investment platforms such as Treasury Bills.

Investor wealth at the Nairobi Securities Exchange (NSE) grew by Sh186 billion in the first half of the year, affirming the bourse’s position as one of Kenya’s most dependable investment options.


 

SHARE THIS STORY

4
inShare

Market capitalisation, the value of all listed stocks, rose 10 per cent to Sh2.01 trillion helped by share price appreciation in key insurance, banking, and telecommunications sectors.

Small and medium-sized counters, however, recorded higher growth than the large ones as reflected in the contrasting trajectories of the two main indices used to measure performance at the Nairobi bourse.

The NSE 20 Share Index — listing of top players in each segment of the market — dropped 0.9 per cent to stand at 4885 points even as the NSE. All Share Index rose 10 per cent to 150 points from 136 points in January.

This effectively means that an investor whose portfolio comprised exclusively of stocks that constitute the NSE 20 Share Index got less returns than one who put his money in non-index stocks.

The market’s performance was particularly stellar when compared with the returns that investors who put their money in other investment platforms such as Treasury Bills.

Returns on investments in fixed income securities such as Treasury Bills trailed equities in the past six months while those who invested in the money markets were hit even harder as the shilling came under pressure with the decline in dollar inflows from the tourism and horticultural export sectors.

Yields on the 91-day T-Bill rate stood in the range of between 8.75 per cent and 11.5 per cent in the first six months of the year while the 182-day T-Bill traded at between 9.8 and 11.6 per cent.

READ: NSE growth rides on strong financial and insurance arms

In the money markets, the shilling weakened against major world currencies — exchanging 1.4 per cent weaker to the dollar in June compared to January.

Real estate, the sector that has delivered the most returns to investors in the past eight years, slowed down in the first six months of the year as economic hardships dampened activity in the sector. 

“Growth was in the range of three to five per cent in the first quarter of 2014 depending on which subsector one looked at. We, however, do not expect this to persist in the long term,” said Knight Frank managing director Ben Woodhams.

With inflation averaging 6.9 per cent so far, investors are expecting less returns in real terms compared to 2013 when inflation averaged 5.7 per cent.

Return on investment in equities at the Nairobi bourse during the first six months of the year were, however, less robust than what the market delivered to investors in 2013 when the NSE 20 Share Index rose 19 per cent while the All Share Index gained 44 per cent.

The NSE last year reviewed the composition of its 20 Share Index, removing Mumias Sugar, Uchumi and Kakuzi, and replacing them with Britam, Centum and CfC Stanbic.