The Nairobi bourse had one of its roughest months in recent history, with investors watching billions in value disappear as global shocks spilt into the local market. This wiped out an estimated Ksh 343.6 billion in paper wealth at the Nairobi Securities Exchange (NSE).
The losses were largely due to the ongoing conflict in the Middle East and the ripple effects it has triggered across global markets.
A strong start, then a sharp fall
March did not begin badly, as the first half of the month showed promise. This was supported by fresh listings such as Kenya Pipeline Company (KPC) and the Africa Logistics Properties (ALP) REIT. Investor activity remained relatively upbeat and built on the momentum seen in February’s rally. However, sentiment quickly shifted.
By mid-March, the escalation of the Middle East war began to rattle global markets. This included disruptions in key oil supply routes like the Strait of Hormuz. Oil prices rose, and panic spread among investors. The impact was immediate and severe at the NSE. The final two weeks recorded the worst stretch in about 19 months. Over Ksh 230 billion was wiped out in just five consecutive trading sessions.
The sell-off was largely driven by sustained foreign investor exit. Data shows that foreign investors remained net sellers throughout the month.
They offloaded shares in 17 out of 22 trading sessions. Total foreign sales stood at Sh8.61 billion against purchases worth Ksh 4.3 billion. This left a net outflow of about Ksh 4.3 billion. Investors shifted funds to safer assets amid fears of inflation, high oil prices, and a possible global slowdown affecting emerging markets like Kenya.
The losses were heavily concentrated in large, well-known companies that dominate the market and attract foreign investors. Safaricom was among the hardest hit. It dropped 14.06 per cent and lost an estimated Ksh 180 billion in market value within a month.
Banking stocks also declined despite strong earnings and improved dividends. KCB Group fell 15.6 per cent. Equity Group Holdings dropped 10.7 per cent. Absa Bank Kenya declined 11.3 per cent. Standard Chartered Bank Kenya slipped 8.83 per cent. The banking index overall lost 8.8 per cent.
Among non-banking firms, Kenya Reinsurance Corporation shed 20 per cent. Kenya Power dropped 13.2 per cent, while Kenya Airways declined 12.3 per cent.
Only a handful of small-cap stocks posted gains. These were led by Africa Mega Agricorp and Eveready. However, they had minimal impact on the broader market performance.
All key indices at the NSE closed in March in negative territory. The NASI dropped 9.8 per cent to 194.82. The NSE 10 Index recorded the steepest fall at 10.5 per cent. The NSE 20 and NSE 25 also declined, reflecting the outsized damage to large-cap stocks. Overall market capitalisation fell from about Ksh 3.5 trillion in February to Ksh 3.2 trillion by the end of the month.
Investors shift as uncertainty rises
Even with the sharp sell-off, overall trading activity weakened. Equity turnover dropped 21.6 per cent to Sh19.6 billion from Sh25 billion the previous month. Bond turnover also declined by 13.7 per cent. This indicates that many investors chose to stay on the sidelines and wait out the uncertainty rather than actively trading.
The performance at the NSE mirrored trends seen across global markets. Equities in Europe, Asia, and the Gulf declined during the same period. The conflict pushed oil prices higher and triggered widespread investor caution. Emerging markets bore the brunt as foreign investors pulled out billions in search of safer assets.
While equities struggled, government securities recorded stronger demand. The Treasury bond auction held on April 1 attracted bids worth Ksh 74.9 billion against an advertised Sh40 billion. This represented an oversubscription of 187.2 per cent. It signalled that local investors are increasingly shifting towards long-term government bonds, which are considered safer during uncertain times. Treasury bill performance remained weaker, with bids falling short of government targets.
Despite the heavy losses recorded in March, early signs of stabilisation have begun to emerge in April. The NASI rose by 1.45 per cent. The NSE 25 gained 2.52 per cent, while the NSE 20 edged up 0.96 per cent. Market capitalisation also increased slightly. This suggests that some investors may be returning to take advantage of undervalued stocks.
The sharp decline seen in March highlights the vulnerability of the NSE to global shocks, particularly those linked to oil prices and foreign capital flows.
However, many Kenyan companies, especially in the banking sector, remain fundamentally strong. They continue to post solid earnings and attractive dividends. The market’s direction in the coming weeks will largely depend on how global events unfold and whether foreign investor confidence in emerging markets like Kenya improves.
Leave a comment