Nairobi Securities Exchange. DaMina Advisors says in six months the stock exchange registered 8.4 per cent return. File
What you need to know:
The NSE’s return was above the 1.8 per cent average return posted by other frontier markets in Africa, excluding South Africa and the 6.32 per cent average return for emerging markets.
The Nairobi Securities Exchange (NSE) registered gains in the first half of the year despite terror attacks and foreign investors showing reduced enthusiasm for most frontier markets. An African markets report by London-based research firm DaMina Advisors LLP says that between January and June the NSE posted an 8.4 per cent return in dollar terms.
The report that covers 30 listed companies in 16 major markets in Africa, said that the NSE’s return was above the 1.8 per cent average return posted by other frontier markets in Africa, excluding South Africa and the 6.32 per cent average return for emerging markets.
South Africa had a dollar return of 8.4 per cent over the same time.
Despite the events in the markets under review, including the tension in Ukraine and Iraq and terrorist bombs in Kenya and Nigeria, stock markets have shown resilience with Kenya up 8 per cent, said the report by DaMina.
The report only looked at Safaricom, EABL, Barclays, Standard Chartered and Equity Bank, the blue chips that are heavily traded by foreign investors. Dar-es-Salaam Stock Exchange (DSE) had the highest return among African markets with a 19.7 per cent return.
National Microfinance Bank and Tanzania Breweries were the DSE stocks DaMina’s report looked at.
Malawi and Seychelles were the other top performing markets with dollar returns of 16.4 per cent and 17.2 per cent respectively while violence-hit Nigeria had a one per cent return.
Analysts expect the NSE to continue posting positive returns but probably not as good as 2013 as some stocks have hit their peaks. The NSE had a 43.7 per cent dollar return in 2013.
A Kenya, Nigeria and Ghana economic outlook report for 2014 by Old Mutual Securities and Ecobank says that banking and insurance stocks are likely to continue their bull run though.
Central Bank of Kenya (CBK) shows banks in the second quarter of 2014 made Sh37.61 billion in pre-tax profits, an increase of 12.5 per cent from Sh33.42 billion registered in the quarter ending March.
“With the macro indicators being relatively stable despite the risks aforementioned, we believe the banking sector will continue to dominate market activity for the rest of the year. It remains among the most active in NSE due to resilience and growth trajectory,” said the report.
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