Nairobi Securities Exchange (NSE) investors have lost Sh157 billion of their wealth since the beginning of the year, underlining the depth of the bear run that has driven the main market index to a two-and-a-half year low.
Market data shows that only 15 counters out of 63 have gained in value, a number that drops to 10 in the past three months.
The NSE 20 Share Index has dipped 12.7 per cent to 4,463 points since the beginning of the year, while the total investor wealth is down to Sh2.142 trillion.
Banking and insurance counters were the biggest losers in the first seven months of the year during which two segments of the market – agriculture and telecommunications – weathered the bear run to increase investor wealth.
Kenya’s 11 listed banks have lost a total Sh109 billion in capitalisation or a 12.7 per cent drop to Sh755 billion. Insurance firms have shed Sh37.5 billion or 20.3 per cent to Sh108 billion.
“We are seeing a pull out in the market to other destinations and asset classes. Foreigners, who control a lot of activity, are moving for example to the US where the Federal Reserve is expected to raise interest rates, making the fixed income market very attractive,” said ABC Capital analyst Joshua Otiende.
“Local investors, pension funds and fund managers – being the largest – are re-looking at their portfolios with the drop of returns from the bourse,” said Mr Otiende.
The financial services counters have been particularly popular picks for foreign investors since 2012, using their sterling performance and positive growth prospects to attract the bulk of the inflows.
The Nairobi bourse has witnessed a stead outflow of foreign funds every month since March, tipping the scales in favour of a bear run.
Foreign inflows helped fuel a bull run that held from 2012 till early this year, pushing the market to a peak of 5,499 points on March 2.
The Equity Bank share has seen the deepest value erosion shedding Sh31.4 billion to Sh153.6 billion, followed by Standard Chartered which has shed Sh15.1 billion to Sh88.4 billion.
In relative terms, mortgage lender Housing Finance lost the biggest chunk of its value shedding 52.5 per cent to Sh7.6 billion.
Cooperative Bank, however, survived the battering with a Sh2.4 billion gain to clock Sh100 billion.
Genghis Capital analysts said the downturn could also be attributed to the frail shilling that has in turn applied sell-side pressures from both local and foreign investors.
Mercyline Gatebi, an analyst with Genghis Capital, said some valuations have now dropped below fair value, signalling the bearish turn may slow down in the short term.
“Most stocks have been severely devalued and are trading way below their fair values. Temporarily, there may be no room for further adjustment of the prices based on fundamentals. A further slide may only be on account of supply side pressures,” said Ms Gatebi.
Agriculture stocks have weathered the NSE storm better, offering double digit returns to investors at a time when other counters have struggled. Collectively, the seven counters in this segment have gained 45 per cent or Sh6 billion to Sh19.7 billion.
Kakuzi share price has, for instance, doubled to Sh360 a share for the year, fuelled by active interest from one of its majority shareholders Kibunga Kimani who has raised his stake in the firm to 29 per cent.
Safaricom, the only counter in the telecommunications segment is up 8.9 per cent to Sh613 billion.
The manufacturing segment lost Sh25.4 billion to Sh326.5 billion with most of the loss coming from cigarette maker BAT, which shed Sh16.5 billion (18.2 per cent) to Sh74.3 billion in the past seven months.
The commercial and services segment, which has been hit hard by the tourism slump and rising cost of living, has seen a collective valuation loss of Sh24.1 billion to Sh76.5 billion.
Among the recently listed stocks, mainly under the Growth and Enterprise Market segment (Gems), Home Afrika has fared worst with year-to-date loss in value of 37.8 per cent.
Atlas Development has shed 16.2 per cent and Flame Tree Group three per cent, while Kurwitu Ventures has remained unchanged at Sh1,500 a share since listing last year.
Home Afrika is now valued at Sh1.01 billion by market capitalisation, down from the Sh4.86 billion valuation at listing on July 14, 2013, and Sh10.13 billion at the close of its first day in the stock market.