A Nairobi Securities Exchange employee on the trading floor. The EAC Markets Protocol was founded in 2010 and seeks to unite the capital markets of individual EAC member-countries into one. Photo/FILE
What you need to know:
Number of active investors stood at 1.67 million in the first quarter of this year, compared to an average of 820,000 in the previous three quarters.
Main sellers in the last six months have been both local and foreign corporates, whose holdings have gone down as those of local individuals increased.
Number of new CDS accounts to the end of March 2014 stood at 9,427 compared to 3,371 opened in the first quarter of 2013. There are about two million CDS accounts in total, including the inactive ones.
The number of active equity investors at the Nairobi Securities Exchange (NSE) doubled in the first three months of this year, driven by stock prices rebound in the middle of a bull run.
The increase reflected the return of local individual investors to the market in response to low valuations that attracted demand for some stocks whose prices had fallen.
“The returns from the market in the past two years have encouraged local investors to return to active trading in the market, especially those who had come in during the Safaricom IPO. It has also coincided with a period of foreign investors booking gains,” said Kestrel Capital research analyst Kuria Kamau.
Data from Capital Markets Authority shows that the number of active investors stood at 1.67 million in the first quarter of this year, compared to an average of 820,000 in the previous three quarters. The data, however, does not distinguish between jointly held accounts and those of individuals.
As a result, the NSE All share index has registered a higher growth gradient compared to the blue chip-dominated NSE 20 share index since the beginning of the year.
The NSE All share index currently stands 10 per cent higher at 150 points compared to its level at the beginning of the year, while the NSE 20 Share Index in the same period is down 1.6 per cent at 4832 points.
The main sellers in the last six months have been both local and foreign corporates, whose holdings have gone down as those of local individuals increased.
The holdings by local individuals stood at 52.4 per cent in the market at the end of quarter one 2014, up from 20.7 per cent in the last quarter of 2013.
Foreign corporates, according to data from Standard Investment Bank, held 21.5 per cent of the stocks down from 39.8 per cent at end of 2013.
Local corporates likewise saw their holdings drop to 24.3 per cent from 37.4 per cent in the two comparative periods.
The sell-offs in the market by foreigners came as emerging markets experienced capital flight following the scale back of US Federal Reserve bond buying quantitative easing programme.
Genghis Capital analysts, however, expect some of the capital to flow back due to a new round of monetary easing by the European Union, although the longer term outlook will be influenced more by the US action.
“Our long-term view is that the market will face a challenging time as US halts its easing programme,” said Genghis Capital in their macroeconomic update for May.
The number of new CDS accounts to the end of March 2014 stood at 9,427 compared to 3,371 opened in the first quarter of 2013. There are about two million CDS accounts in total, including the inactive ones.
The increase in the number of active investors has seen the number of deals concluded increase as well.
In the four months of the year, NSE data shows that the number of deals concluded stood at 172,091, compared to 138,292 in the first four months of 2013. Similarly, 2014 cumulative equity turnover to April stood at Sh59.5 billion, compared to Sh44.2 billion up to April 2014.
This augurs well for stockbrokers, whose earnings stand to be boosted not only by the increase in equity turnover from which they draw their commissions, but also from the increase in active accounts.
Their clients whose CDS accounts see trading activity at least once in a month will be paying an account maintenance fee (minimum is Sh50), with implementation having started in March.
