Investors at the Nairobi Securities Exchange (NSE) gained Ksh88 billion between April and June defying the economic effects of COVID-19 on the economy, the Capital Markets Authority (CMA) Quarterly Statistical Bulletin for the period ended June 2020 shows.
The report shows the number of shares traded at the bourse increased by 4.51% to Ksh1.42 billion compared to Ksh1.36 billion in the preceding quarter.
Performance defying COVID-19 also manifested itself via the 4.37% increase in the NSE All-Share Index (performance measurement tool for all listed companies) and the decline of 1.22% in the NSE 20-Share Index (performance measurement tool of the top 20 firms at the NSE) registered during the quarter.
According to CMA, the numbers were a huge improvement from the corresponding declines of 20.73% and 25.95% respectively witnessed between January and March 2020 when the first COVID-19 case was reported in Kenya.
On the flip side, the Derivatives market witnessed a 14.90% decrease in number of contracts traded; from 302 contracts between January and March, to 257 contracts traded between April and June. Equities turnover, likewise, dropped by 9.54% to Ksh39.53 billion, compared with the Ksh43.70 billion registered between January and March.
In the secondary bonds market between April and June, bond market turnover decreased by 13.11% with Ksh136.65 Billion worth of bonds traded compared to Kshs. 157.26 Billion traded in between January and March.
A further comparison of Q2.2020 bond turnover with Q2.2019 indicates a 32.19% decrease from Ksh201.53 billion recorded in Q2.2019 to Ksh. 136.65 billion recorded in Q2.2020.
Bond turnover declined by 13.50% to Ksh136.65 billion compared to the Ksh157.98 Billion traded in Q1. 2020.
“This is mainly attributed to investor preference to hold-on to relatively safer instruments during the current period of uncertainty; and to a smaller extent, the redemption of two medium-term notes in March and June 2020,” reads the report.
“Outlook for the quarter remains positive for the primary debt capital with more Treasury Bond issues. The secondary debt and equities market are further expected to remain stable driven by innovations to promote more activity, but performance could be undermined by investors’ decisions to hold on to safer securities, persistent net foreign equities outflow, profit warnings by listed companies and the negative impact of the COVID-19 Pandemic, with infections projected to peak during this period,” reads the report.
The CMA is spearheading the implementation of a short-term capital markets recovery strategy which is expected to mitigate against existing and emerging risks, as it continues to work with all market stakeholders to put in place measures to further cushion the market from such shocks and to boost investor confidence during these unprecedented times.
Suspension of Trading
During the period under review (April- June), trading of Deacons (East Africa) Plc, Cement Plc, Mumias Sugar Co. Ltd remained suspended.
Deacons was delisted from NSE after being put on administration in November 2018 while Mumias was placed under administration by the Kenya Commercial Bank (KCB) Group in September 2019.
In the same vein, Kenya Airways shares were suspended temporarily for 90 days during the quarter as discussions on its nationalization continue to take shape.
ARM which had been administration was bought by billionaire Narendra Raval in May 2019.
KenolKobil Ltd was delisted from the bourse in May 2019 after a successful takeover by Rubis Energie.