Investors at the Nairobi Securities Exchange (NSE) have lost over Ksh 564 billion (US$5.6 billion) in the last five months as a bear-run at the bourse took a toll on their wealth.
According to Xinhua, market capitalisation, which measures investors’ wealth, stood at US$23.3 billion on Tuesday, down from US$28.9 billion at the end of April.
A number of stocks at the market are currently trading below the initial public offer price after maintaining steady decline in recent months.
Some stocks whose prices have declined to sell below the initial public offer price are Kenya Power (Ksh 5), Mumias Sugar (Ksh 0.60) and Nation Media Group (Ksh 73.6).
Analysts say the wiping out of investors’ wealth as one of the worst at the Kenyan bourse. The decline is attributed to poor performance by blue-chips, which has seen most foreigners exit the market, the Chinese news agency reports.
According to Cytonn, a Nairobi-based investment firm, part of the woes at the bourse is attributed to uncertainty over the capping of interest rates on loans that were imposed two years ago. MPs shot down a proposal to repeal the rate capping law though National Treasury Cabinet Secretary Henry Rotich says the government will revisit the issue after passage of the controversial Finance Bill 2018.
Early in the month, the bear-run pushed all indicators at the bourse to the lowest level since the start of the year with investors’ wealth at the bourse standing at Ksh 2.4 trillion (US$24 billion) on September 7, losing Ksh 21.5 billion (US$213 million) that day alone. The index has lost US$1.05 billion since the start of September as stock prices fall.
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“All indicators are at their lowest level recorded since January, highlighting a bearish market. This can be explained by less favourable financial performance of some listed companies,” the Central Bank of Kenya said.
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