Stock market investors lost Sh172.7 billion of their wealth in April as the Nairobi bourse cooled off from the previous month’s heightened activity that rallied share prices and created billions of shilling in paper wealth.
The latest Nairobi Securities Exchange (NSE) #ticker:NSE data shows that investor wealth — as measured by market capitalisation — dropped to Sh2.64 trillion on April 30 from the all-time high of Sh2.896 trillion, recorded on April 5.
Equity turnover also dipped with total value of shares traded standing at Sh15.08 billion in April compared to Sh22.9 billion in March.
All of the NSE’s three indices also retreated during the month in what was seen as a normal price correction that was expected after the quarter one rally.
Prices of large capitalisation stocks, including Safaricom, KCB, Equity Bank and EABL retreated, pulling down the market indices, which in turn negatively affected trading volumes.
“This subdued performance has been the norm for the past one month following a month (March), which was characterised by a bull run,” Genghis analyst Grace Wangeci said in a note, adding that “except with occurrence of any major events, we do not expect the current trend to change as activity remains centred on the telecommunication and banking sectors.”
The benchmark NSE 20 share index ended April 2.9 per cent or 110 points down at 3,735, while the NSE All Share Index (NASI) was down 11.7 points or 6.1 per cent to 179.5. The NSE 25 Share Index was down 265 points or 5.3 per cent to 4,700.
The bourse, however, remains on positive territory compared to the beginning of the year. NSE opened 2018 with a market cap of Sh2.5 trillion, while the NSE 20 Share Index and the NASI opened at 3,711 and 171.2 points respectively.
The negative share price movement has been largely attributed to heightened foreign investor selling on large counters in a profit taking season that was expected after the quarter one rally.
Retreating share prices also mean that speculators sit out of the market because of limited opportunities to take a profit, leaving the bulk of trading to institutional and long-term investors. Safaricom #ticker:SCOM, which carries large weight on the NSE, retreated by 8.9 per cent during the month to close at Sh28.25 while EABL #ticker:EABL was down 5.7 per cent to close April at Sh250.
Other large stocks such as Equity Bank #ticker:EQTY and KCB #ticker:KCB also ceded ground, ending April 8.8 per cent and 3.8 per cent lower at Sh49.25 and Sh50 respectively.
BAT Kenya #ticker:BAT, a major stock in the price weighted NSE 20 share Index, was down 15.7 per cent during the month to close at Sh657. This index carries a heavier bias towards stocks with a higher nominal price.
The effect of the fall in the prices of these large cap counters was however more pronounced on the NASI, which is a market cap weighted index with a bias towards big counters such led by Safaricom.