Capital Markets

NSE May sales up 16pc on profit-taking rally

Nairobi Securities Exchange
A Nairobi Securities Exchange front office employee attends to a client. FILE PHOTO | NMG 

The value of shares traded at the Nairobi Securities Exchange (NSE) in May rose 15.5 percent as investor activity on large stocks rallied partly on profit-taking.

NSE data shows equities turnover stood at Sh14.56 billion, compared to Sh12.61 billion in April.

The cumulative turnover for the first five months of the year stood at Sh70.87 billion, up by 4.8 percent compared to the Sh67.6 billion traded in the first five months of 2019.

This increase is good news for market intermediaries, who charge a commission of up to 1.78 per cent from the traded volumes they handle at the market, which is also shared with the market regulator, the Central Depository & Settlement Corporation Limited (CDSC) and the NSE Ltd.

The market had opened the month on the up, driven by gains on large stocks such as Safaricom #ticker:SCOM, EABL #ticker:EABL, Equity Bank #ticker:EQTY, KCB #ticker:KCB and Co-operative Bank #ticker:COOP, before retreating in the latter weeks as investors sought to cash in on capital gains.


These counters are the mainstay of foreign trading desks at the NSE, due to ample liquidity and the solid fundamentals behind the blue chips.

Foreign traders last month thus increased volumes, especially on the sale side where net outflows rose by 15 percent.

“During the month, foreign investors remained net sellers with a net selling position of Sh4.46 billion ($41.9 million), compared to April’s net selling position of Sh3.88 billion ($36.4 million),” said analysts at Cytonn Investments in a monthly market review note.

Local investors also increased activity on some counters, especially Kenya Airways #ticker:KQ, which saw an unexpected rally during the month before starting to pare back the gains at the end of May.

The low prevailing prices, with the market trading at an average price to earnings ratio of 8.1 compared to a historical price-earnings ratio average of 13.1 times, means there are opportunities for buyers, which may drive up volumes.

The benchmark NSE 20 Share Index ended the month 0.5 percent lower at 1948 points, while the NSE All-Share Index was 1.8 percent lower at the end of May.

Market capitalisation at the bourse shrunk by Sh39 billion, or 1.8 percent, during the month to close at Sh2.095 trillion.