FTSE indices drop after one year of consistent gains
A trader monitors stocks at the NSE. The FTSE NSE Kenya Indices have recorded loss of value in the past one month. FILE
What you need to know:
The FTSE NSE 15 Index lost 5.5 per cent to Sh23.86 billion in net capitalisation in the week to June 14, while the FTSE NSE Kenya 25 Index lost 5.6 per cent to Sh29.54 billion in capitalisation over the same period.
The FTSE NSE Kenya Indices have recorded loss of value in the past one month, bucking a trend of returning consistent gains in the past one year. This means international investors who picked their portfolios based on the FTSE NSE indices have recorded losses in this period.
The FTSE NSE 15 Index lost 5.5 per cent to Sh23.86 billion in net capitalisation in the week to June 14, while the FTSE NSE Kenya 25 Index lost 5.6 per cent to Sh29.54 billion in capitalisation over the same period.
Latest data by the Nairobi Securities Exchanges shows the FTSE NSE 15 Index stood at 153.67 points as at June 17 while the FTSE NSE 25 Index was at 157.93 points.
Data released by the NSE shows that the slide in value has coincided with a loss in value of the big cap counters in the market.
The biggest loser in the week in the FTSE NSE 25 was Kenya Airways and EABL, which shed 8.1 per cent each, with Equity and KCB losing 7.2 and 6.7 per cent respectively in price value.
FTSE NSE 15 was also characterised by only one company making a price gain in the week, with KenGen’s modest 0.63 per cent gain.
The indices are not as widely used by local investment advisors as the NSE-All share and 20-share indices in their day to day market analysis, and are more tailored for international investors.
“We tend to rely more on the NSE 20-share and NSE All-share indices in our advisories, since they are more representative of the daily stock movements,” said ABC Capital general manager Samwel Kiraka.
In the past month, the FTSE 15 index has lost 2.5 per cent in average price of constituent stocks, while the FTSE 25 index fared slightly worse with a loss of 2.9 per cent.
In the three-month period, the FTSE 15 and FTSE 25 indices have gained 4.3 per cent and 4.6 per cent respectively, while in the period of six months to June the gains have been 28.3 per cent and 28.5 per cent respectively.
In the preceding 12 month period, the two indices have gained 49 per cent each in price of counters. The FTSE NSE Kenya 15 Index tracks the performance of the largest 15 stocks ranked by full market capitalisation while the FTSE NSE Kenya 25 Index tracks the performance of the 25 most liquid stocks.
“The review of the constituent counters in the two indices is done semi-annually. The eligibility is determined by the market cap and the liquidity which is reviewed progressively in the previous six months,” said NSE marketing and product development manager Donald Ouma.
All the listed stocks in the NSE are eligible for the indices, but ordinary shares which count towards the index are subject to free float restrictions, which locks out shares directly owned by government organs, sovereign foreign wealth funds, shares held by directors, senior executives and managers of the company and by their families.
Other shares which do not count towards the two indices include shares held by employee ownership plans, public companies and those by founder directors, former directors and private equity firms, whose holding is above seven per cent in the stock.
