Shilling fall sees dollar investors lose at regional equity markets

Dollar investors in regional stockmarkets have registered a drop in their earnings as local investors enjoyed a marginal increase. PHOTO | TEA GRAPHIC 

By ALLAN OLINGO, The EastAfrican

Posted  Saturday, June 27  2015 at  13:30

In Summary

• In the first five months of the year, the market’s performance remained fairly flat with a 1.72 per cent year to date average return for local investors, and an average drop of 7.9 per cent for dollar investors.
• In terms of forex adjusted returns on the dollar, the RSE fared better than Kenya and Uganda. Rwanda had a drop of 5.6 per cent, followed by the NSE at 7.7 per cent; USE had a negative 7.9 per cent. Tanzania had the biggest drop in returns, with 10.3 per cent.

Dollar investors in regional stockmarkets have registered a drop in their earnings as local investors enjoyed a marginal increase.

In the first five months of the year, the market’s performance remained fairly flat with a 1.72 per cent year to date average return for local investors, and an average drop of 7.9 per cent for dollar investors.

The Dar es Salaam Stock Exchange is still the best performer in the region, with a 7.76 per cent appreciation so far this year. The Nairobi Securities Exchange recorded a 7.3 per cent increase, even though there was a decline of 0.47 per cent on the year to date performance for local investors.

READ: Dar stock exchange ranked Africa’s 2014 top performer

The Uganda Securities Exchange appreciated by 3.76 per cent while the Rwanda Stock Exchange saw a 5.47 per cent increase.

DSE chief executive Moremi Marwa said the year-on-year growth in domestic market capitalisation was 64 per cent for the total market, and 36 per cent for indices.

“This was a result of the good performance of the listed companies, and a positive investor outlook,” Mr Marwa said. “The good dividend payments were also a factor.”

Equity market capitalisation at the NSE fell  by 0.87 per cent  to Ksh2.27 trillion ($22.62 billion) by close of trading last week, from Ksh2.29 trillion ($22.82 billion)  by the end of December 2014.

The domestic market capitalisation of the DSE increased from $4.2 billion at end of 2014, to $4.35 billion by the end of the first quarter of 2015. Its total market capitalisation also increased to $9.89 billion, up from $9.68 billion, and its turnover rose to $125.4 million from $17.9 million in April 2014.

Swissport was one of the best performing counters with a 43.5 per cent increase on year to date growth, and a 67 per cent return on investment. CRDB Bank gained 5.4 per cent with a 21.68 per cent return on investment.

Other counters that have gained include Tanzania Cement Company and National Microfinance Bank with a 27 per cent return on investment each.

The market turnover at the NSE was $506.81 million in the first quarter; the NSE 20 Index was up 2.7 per cent in the first quarter compared with the same period last year.

Despite the appreciation, the Nairobi Securities Exchange 20 Share Index fell by 6.3 per cent, from 5117.43 at the start of the year to 4,786.74 in June. The first quarter also saw a net foreign outflow of $34.6 million, attributed to the depreciating shilling, the capital gains tax and investors reorganising their portfolios as they seek returns in other African markets.

Analysts at StratLink Africa said the Kenyan market has resumed its downward trend after a slight rally.

“We assess that investors are adjusting their positions in select counters that have witnessed a rise in price in the recent past,” the analysts said in the June research note.