Summary
- Investors traded bonds worth Sh47.6 billion during the month, compared to Sh37 billion in January.
- The traded turnover in the first two months of the year though lags the same period in 2019, when bonds worth Sh99.2 billion were traded.
- In February 2019, bonds turnover stood at Sh48.26 billion reflecting far worse poor fortunes for equities.
Bonds turnover at the Nairobi Securities Exchange (NSE) went up
28 percent in February compared to January as investors looked for
safety in government paper when turbulence hit equity markets due to the
negative effects of coronavirus outbreak.
Investors traded bonds worth Sh47.6 billion during the month, compared to Sh37 billion in January.
The
traded turnover in the first two months of the year though lags the
same period in 2019, when bonds worth Sh99.2 billion were traded. In
February 2019, bonds turnover stood at Sh48.26 billion reflecting far
worse poor fortunes for equities.
Analysts said the
flight to safety last month was not just seen in the Kenyan market, as
global equities felt the heat of the coronavirus outbreak that has
threatened performance of companies across the globe.
The
scare has disrupted supply chains and weakened demand for goods and
services worldwide, raising the spectre of a substantial reduction in
global economic growth.
“The NSE was not immune to the sell-off as investors’ risk
antennas shot-up. With the bleeding in developed markets, investors may
seek to reduce exposure on equities in a capital preservation drive
supporting further losses for the local stocks,” said analysts at NCBA
in a weekly report.
The bulk of the trades came in the
last week of February, coinciding with the sharp fall in equities prices
as the coronavirus fears escalated in Kenya.
During
the week ending February 28, Sh16 billion worth of bonds were traded, up
from Sh11.33 billion the previous week. In the first two weeks of the
month, trades stood at Sh11.26 billion and Sh9 billion.
The
equities market had a bruising ending in February, with the NSE 20
Share Index closing the month at a 16-year low of 2,337 points as
foreign investors led a sell-off of blue chip stocks.
On
the other hand, government securities have continued to offer a
consistent return, with the local yield curve hardly deviating from the
range of 7.32 percent for the shortest-term security (91-day-Tbill) to
13.6 percent for long terms bonds.
The stability in the
yields is partly due to the rejection of bids that the Central Bank of
Kenya deems to be expensive in primary sales — that’s is those exceeding
the yield curve on the higher side.
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