Stock market investors lost Sh172.7 billion of their wealth in
April as the Nairobi bourse cooled off from the previous month’s
heightened activity that rallied share prices and created billions of
shilling in paper wealth.
The latest Nairobi Securities Exchange (NSE)
data shows that investor wealth — as measured by market capitalisation —
dropped to Sh2.64 trillion on April 30 from the all-time high of
Sh2.896 trillion, recorded on April 5.
Equity turnover
also dipped with total value of shares traded standing at Sh15.08
billion in April compared to Sh22.9 billion in March.
All
of the NSE’s three indices also retreated during the month in what was
seen as a normal price correction that was expected after the quarter
one rally.
Prices of large capitalisation stocks, including Safaricom, KCB,
Equity Bank and EABL retreated, pulling down the market indices, which
in turn negatively affected trading volumes.
“This
subdued performance has been the norm for the past one month following a
month (March), which was characterised by a bull run,” Genghis analyst
Grace Wangeci said in a note, adding that “except with occurrence of any
major events, we do not expect the current trend to change as activity
remains centred on the telecommunication and banking sectors.”
The
benchmark NSE 20 share index ended April 2.9 per cent or 110 points
down at 3,735, while the NSE All Share Index (NASI) was down 11.7 points
or 6.1 per cent to 179.5. The NSE 25 Share Index was down 265 points or
5.3 per cent to 4,700.
The bourse, however, remains on
positive territory compared to the beginning of the year. NSE opened
2018 with a market cap of Sh2.5 trillion, while the NSE 20 Share Index
and the NASI opened at 3,711 and 171.2 points respectively.
The
negative share price movement has been largely attributed to heightened
foreign investor selling on large counters in a profit taking season
that was expected after the quarter one rally.
Retreating
share prices also mean that speculators sit out of the market because
of limited opportunities to take a profit, leaving the bulk of trading
to institutional and long-term investors. Safaricom
, which carries large weight on the NSE, retreated by 8.9 per cent during the month to close at Sh28.25 while EABL
was down 5.7 per cent to close April at Sh250.
Other large stocks such as Equity Bank
and KCB
also ceded ground, ending April 8.8 per cent and 3.8 per cent lower at Sh49.25 and Sh50 respectively.
BAT Kenya
,
a major stock in the price weighted NSE 20 share Index, was down 15.7
per cent during the month to close at Sh657. This index carries a
heavier bias towards stocks with a higher nominal price.
The
effect of the fall in the prices of these large cap counters was
however more pronounced on the NASI, which is a market cap weighted
index with a bias towards big counters such led by Safaricom.
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