Capital Markets

NSE 20 share index prices fall after news of US Fed rate rise

A staff of the Nairobi Securities Exchange take notes at the Exchange in Nairobi. PHOTO | FILE
A staff of the Nairobi Securities Exchange take notes at the Exchange in Nairobi. PHOTO | FILE 

Share prices of half of the companies linked to the Nairobi Securities Exchange (NSE) 20 Share Index fell last Friday as some foreign investors sold.

The selling-off came as the US Federal Reserve increased the bench mark interest rate for the first time in nearly a decade.

The Fed raised the rate by 0.25 percentage points, sparking a variety of reactions in global markets across the world.

The 10 companies whose prices fell last Friday were ARM Cement, Britam, Coop Bank, Equity Bank, Jubilee, Kengen, Nation Media Group, Scangroup, StanChart and CfC Stanbic.

The 20-share index slipped below 4,000 points last Friday, having lost 15.27 points as half of its counters lost.

Foreign investors often focus on the index-linked counters as they are supposed to be representative of the entire equities market.

In terms of market capitalisation, however, the NSE gained Sh4 billion to stand at Sh2.05 trillion. The gain was mainly driven by the rise in the market cap of Safaricom that rose by Sh4 billion.

“Foreign investors dominated trading with participation at 80.3 per cent and were net sellers – 91.13 per cent of sales,” said Standard Investment Bank (SIB) in a market report.

The turnover moved up marginally to Sh630 million last Friday from Sh612 million registered the previous day.

KCB, Equity Bank and Safaricom were the top movers and accounted for 80.8 per cent of market activity.

Week on week, turnover soared to Sh4.8 billion from Sh3.5 billion posted the previous week as many investors sought to sell.

On the day the news of the increase in the US benchmark rate broke last Thursday, foreign investors were also net sellers on the NSE. SIB reported that for the first time in four sessions, all NSE indices went down last Thursday as the news sank in.

“For the first time in four sessions, all the indices were down with the NSE 20 Index, NASI and NSE 25 Index down 0.16 per cent, 0.53 per cent and 0.90 per cent respectively. … With participation at 79.4 per cent, foreign investors dominated market and were net sellers,” said SIB.