Nairobi Securities Exchange (NSE) gave investors the second-lowest return among its African peers in the first half of the year, weighed down by exposure to foreign investors who have been fleeing to developed markets due to the Russia-Ukraine crisis.
The NSE said in its Quarter Two performance that trends across the globe pointed to equities shedding value, apart from a few isolated markets.
Among the stock markets that are classified as tier two in Africa — Kenya, Egypt, Nigeria, Morocco, and Tunisia — NSE’s return of negative 22.3 percent in the six months to June only bested Egypt’s negative 27.3 percent.
Nigeria’s stock market was the best, offering a return of 21.2 percent in the period. Morocco and Tunisia’s bourses recorded returns of negative 12.3 percent and 6.7 percent respectively.
South Africa’s Johannesburg Stock Exchange, Africa’s only tier-one market, recorded a return of negative 9.1 percent.
“The only market with an upside is Nigeria at the moment. Generally, markets across Africa are experiencing similar trends,” said NSE chief executive officer Geoffrey Odundo last week.
“Our market is highly correlated with the effects of the globe and, therefore, we are experiencing a downturn in equities performance. We, however, expect to see good recovery in quarter three and four because the of opportunities that the valuations present….”
Foreign investors withdrew a net of Sh12 billion from the NSE in the first half of the year, causing a fall in valuations of blue-chip stocks whose trades are usually dominated by this class of investors.
Mr Odundo said, however, that the market has started seeing the positive effects of investors, largely locals, taking advantage of low share prices.
Capitalisation rose Sh149 billion since the beginning of this month, clawing back some of the Sh604 billion erosion in the first half of the year.