The Nairobi Securities Exchange (NSE) has shed Sh201.8 billion in investor wealth over the past month, after key stock prices fell on selling pressure from investors looking to lock in profits from an earlier rally.
Data from the bourse shows that market capitalisation—the measure of investor wealth— stood at Sh2.842 trillion at the close of trading on December 2, having come down from the all-time high of Sh3.04 trillion recorded on November 6.
The highs of the first week of November represented the first time that the NSE had crossed the Sh3 trillion mark, thanks to a sustained rally that was accelerated in October by positive corporate financial announcements by key companies, including Safaricom, Equity Group, and Co-operative Bank of Kenya.
These large blue-chip firms saw a strong price rally in September and October, with the banks in particular rising to all-time highs as investors took positions anticipating improved dividend returns in the medium term.
The higher prices, however, encouraged those investors who had booked large capital gains to sell their holdings to lock in the profits, with an eye on re-entry at a lower price at a later date, or to reinvest the gains in other stocks.
“With the current Bull market, any dips have been as a result of local and foreign investors trimming their positions and profit taking,” said Wesley Manambo, a senior research associate at Standard Investment Bank.
“Such a dip might not hold for long, however, because equities still offer a strong value proposition when compared to other asset classes, for instance, fixed income, where interest rates have been falling.”
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Foreign investors made net sales of Sh3.02 billion in November, up from net exits worth Sh1.66 billion in October, piling pressure on the stocks of large firms on which they concentrate their activity in the local market.
Over the last four weeks, the biggest value decline has been on Safaricom at Sh72.1 billion to Sh1.14 trillion, courtesy of its share price falling by 5.9 percent to Sh28.50 from Sh30.30 on November 6.
KCB Group follows with a 15.9 percent or Sh35.35 billion decline in valuation to Sh186.38 billion, while Equity Group’s market cap has declined by Sh26.42 billion or 10 percent to Sh236.79 billion in the period.
Other top decliners are EABL at Sh18.98 or 9.8 percent to Sh173.97 billion, while Absa Bank Kenya has seen its market valuation fall by 9.9 percent or Sh13.57 billion to Sh123.56 billion in the one month.
Despite the price correction, however, the NSE remains on course to beat other asset classes in returns this year, having gained 46.5 percent or Sh902.6 billion in market cap since the beginning of the year.
This has put it ahead of other assets such as bonds, whose capital gains in the secondary market this year have peaked at about 22 percent. Meanwhile, interest rates on new bond issuances have fallen to about 12 to 14 percent, down from the highs of between 14.5 percent and 18.5 percent on infrastructure bonds that were issued in 2023 and 2024.
Rates on Treasury bills have meanwhile fallen to between 7.7 percent and 9.4 percent, from highs of 17 percent in August 2024.
Other financial assets, such as fixed cash deposits, are paying investors 7.63 percent in annual interest, while those holding dollars as assets have had a flat return due to the shilling/dollar exchange rate remaining largely unchanged at the Sh129 level for the past 16 months.
