Nairobi Securities Exchange (NSE) Chairman Kiprono Kittony has encouraged Kenyan investors to take advantage of low prices at the stock market to expand their portfolios.
Kittony anticipated that the market would rebound allowing investors to enjoy hefty dividends.
“The market is trading at a price-to-earnings ratio of less than 10x. This presents a unique opportunity for investors to buy listed securities at attractive prices and enjoy capital gains when the market rebounds,” Kittony stated in an interview with KTN News on Tuesday, July 5.
The value of the bourse in May hit a 20-month low, primarily driven by a sell-off by foreign investors. Foreign investors have been fleeing frontier and emerging markets in a case of capital flight driven by various factors – including higher US interest rates.
The NSE has, however, rallied in the past week as local investors picked up cheap stocks following the sell-off by foreign investors. Blue chip stocks, which bore the brunt of the sell-off, have been the biggest gainers. Safaricom share value grew by Ksh136.2 billion within the week.
Investors gained a Ksh192 billion increase in paper wealth in just one week. EABL share value rose by Ksh23.3 billion while KCB gained Ksh10.4 billion.
Equity share value rose by Ksh15 billion as Co-operative bank gained Ksh1.1 billion.
Investors buying the dip are counting on enjoying large dividend payouts as the blue-chip firms remain profitable despite the sell-off by foreign investors. The drop in share prices has driven an increase in the dividend yield on stocks to a range of between 5.4 percent and 14.7 percent.