Staff at the Nairobi securities Exchange. FILE PHOTO | NMG
Bond turnover at the Nairobi Securities Exchange
fell 11 per cent in the first half of the year compared to a similar
period last year after investors pumped capital in primary security
issues and equities.
NSE data shows that bonds turnover
in the six months to June stood at Sh237.4 billion, which was Sh29.8
billion less than the Sh267.2 billion traded in the first six months of
2016.
At the same time, the primary Treasury bill auctions attracted subscription of 263.2 per cent in the six months.
“Despite
more interest in the bond market most investors have preferred the
primary market over the secondary due to the risk involved with the
secondary market, especially where you are working with much more
expensive money (due to the floor on deposits at seven per cent),” said
Genghis Capital head of fixed income Kenneth Minjire.
“There
have (also) been less foreign investors investing in the bond market
with most of the activity this year from them being on the sale side.”
The
government’s appetite for new domestic debt is expected to remain
strong in the current fiscal year due to a large budget deficit of Sh524
billion, meaning that the trend of preference by investors for new
securities may persist.
In
contrast with bonds, the turnover in the equities market went up in the
six months to June, coming in at Sh82 billion compared to Sh73.6
billion in first half last year.
This increase in
trading, especially in the second quarter of the year, coincided with an
improvement in share prices across key sectors such as banking,
services and manufacturing.
“After struggling in the
first quarter, the Kenyan equities market recovered in the second
quarter as a result of gains in prices of large cap bank stocks such as
, Group, Cooperative and Equity Group…,’’ said Cytonn Investments’ half-year market report.
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