Investor wealth at the NSE rises by Sh214bn in four months to April
NSE Trading Floor. FILE
Investor wealth at the Nairobi Securities Exchange (NSE) grew by Sh214 billion between January and April, a summary of trade data in the first four months of the year has showed.
The stock market’s measure of share price movements, the NSE 20-Share Index, gained 17.06 per cent in the period to close at 4,765 points on April 30.
“Market capitalisation hit a historical mark of Sh1.6 trillion, gaining Sh214 billion in the period January to April 2013,” noted the NSE in the report released on Wednesday.
The market performance went against expectations that the bourse would take a hit from the political risk surrounding the March General Election and the presidential petition that followed.
The sentiment has, however, now shifted to expectations of higher growth, especially with the boost from the Central Bank of Kenya that on Tuesday cut its lending rate from 9.5 per cent to 8.5 per cent.
“We expect capitalisation at the bourse to grow as a result. CBK has signalled it will increase liquidity in the market with its lending rate action, and so we expect some of this cash to find its way to the bourse,” said Suntra Investment Bank research analyst Johnson Nderi.
Equity turnover, however, has fallen in the past three months, having gone up in February following high sell-offs of shares by foreign investors.
Foreign investor participation fell from 56 per cent in February to 48 per cent in March compared to equity turnover, decreasing further to 43 per cent in April. This reflects the heightened selling activity before the Elections due to profit taking and flight from political risk.
In February, Equity turnover stood at Sh14.6 billion, dropping to Sh11.18 billion in March and further to Sh9.8 billion in April.
The NSE has recorded a sustained share price gain throughout 2012 to early 2013, making some stocks ripe for capital gain sell-off. The NSE 20-Share index gained 28.95 per cent in 2012, closing at 4,133.02 points from 3,205.02 points in 2011.
