Money Markets
By CHARLES MWANIKI
In Summary
- NSE has slowed down as dollar returns fall with the weakening of the shilling but its performance amongst six second-tier markets has been relatively good.
The Nairobi Securities Exchange (NSE) is the
second-best performer this year amongst Africa’s large bourses despite
recent foreign investor outflows.
NSE has slowed down as dollar returns fall with the
weakening of the shilling but its performance amongst six second-tier
markets has been relatively good.
The NSE All Share Index (NASI) which tracks the
performance of all the stocks at the exchange is up 6.3 per cent this
year at 173 points, while the NSE 20 share index is down 0.4 per cent at
5091 points.
African Alliance (AA) market data on the All-Share
indices of peer bourses in Africa shows the top performer is the Tunis
Stock Exchange which is up 8.9 per cent for the year.
Morocco’s Casablanca Stock Exchange ranks third
with a 3.3 per cent gain, followed by the Nigeria Stock Exchange which
is up slightly at 0.06 per cent. The Zimbabwe and Egypt stock exchanges
have negative returns for the year, down 3.9 and 10.9 per cent
respectively.
Smaller stocks have been outperforming the bigger
ones at the NSE in recent weeks, although analysts expect its
performance as a whole to improve as corporate announcements pick up
again.
“There still exist pockets of opportunities in the
NSE thus we expect the bourse to reverse current momentum in the next
few weeks with the biggest catalysts being the banking sector as listed
lenders begin announcing first quarter earnings,” said Genghis Capital
analyst Florence Kimaiyo.
“Liquidity and corporate actions that unlock value
remain key factors to watch out for, especially with our high exposure
to foreign investors but value in the mid-cap to small-cap counters
cannot be overlooked.”
Data from AA though shows dollar returns of -2.9
per cent for the NSE in April, when the shilling depreciated sharply to
the dollar by 4.2 per cent to exchange at 94.50.
In 2014, dollar investors at the NSE saw a gain of 13.6 per cent, which was however still below the NASI gain of 20 per cent.
The other bourses have recorded mixed performances in dollar returns over the past month. Nigeria is leading with a gain of 8.9 per cent followed by Tunisia at 7.12 per cent.
The other bourses have recorded mixed performances in dollar returns over the past month. Nigeria is leading with a gain of 8.9 per cent followed by Tunisia at 7.12 per cent.
Nigeria is recovering after a presidential election
that was hailed as a success. The poll has restored investor faith in
the country’s economy.
On the other hand, Egypt and Morocco have negative
dollar returns of 5.6 per cent and 0.6 per cent respectively. South
Africa Johannesburg Stock Exchange that is rated the sole tier-one
bourse in the continent, has a dollar return of 7.7 per cent.
Its JSE All Share Index is up 9.4 per cent in the
past month. Foreigners looking to invest in a country carefully consider
the dollar valuation against local currencies at entry and exit since
this determines their margins.
A weakening local currency discourages their entry
since it means investors get fewer dollars when exiting the market —
leading to lower dollar return.
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