Investors turn to gold in bear market

Nairobi Securities Exchange staff monitors electronic trade. FILE PHOTO | NMG 

By OTIATO GUGUYU
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Summary

• The gold derivative at the Nairobi Securities Exchange (NSE) recorded its highest ever traded volume of 40,600 units on Tuesday as investors eyed the safe haven metal as an alternative to battered shares.
• The Absa NewGold ETF thus saw a turnover of Sh66 million, all from foreign investors, activity that was in sharp contrast to its trading history when it has gone for multiple sessions without a single trade.

The gold derivative at the Nairobi Securities Exchange (NSE) recorded its highest ever traded volume of 40,600 units on Tuesday as investors eyed the safe haven metal as an alternative to battered shares.

The Absa NewGold ETF thus saw a turnover of Sh66 million, all from foreign investors, activity that was in sharp contrast to its trading history when it has gone for multiple sessions without a single trade.

It has only traded more than 1,000 units in a single session on one other occasion since the beginning of last year.

Investors have turned to gold to defend their value as stock markets have taken a plunge on lower expectations following the outbreak of Covid-19 pandemic that has seen global economies ground to a halt.

The gold ETF launched in 2017 with a market capitalisation of Sh576 million. It is now worth Sh646 million at the price of Sh1,615 a unit.

“It is encouraging to see positive market trends despite the unfortunate circumstances we all find ourselves in. This is the highest activity seen on the ETF based on the turnover recorded since its listing at the NSE,” said Geoffrey Odundo, the chief executive officer of NSE.

“Investing in ETFs is affordable and easier for first time, retail and institutional investors to access a wider range of investment options previously only available to select investors.”