Capital Markets

NSE slides to 17-year low as stocks suffer huge losses

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Nairobi Securities Exchange. FILE PHOTO | NMG

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Summary

  • Kenya’s stock market hit a new 17-year low in Tuesday’s trading as most stocks continued to suffer losses.
  • The benchmark NSE 20 Share Index closed at 1,794.6 points, a level last seen on April 28, 2003.
  • The performance has pushed the current bear market to five-and-a-half years, with the index falling 67.3 per cent from the peak of 5,491.3 points recorded on February 2, 2015.

Kenya’s stock market hit a new 17-year low in Tuesday’s trading as most stocks continued to suffer losses.

The benchmark NSE 20 Share Index closed at 1,794.6 points, a level last seen on April 28, 2003.

The performance has pushed the current bear market to five-and-a-half years, with the index falling 67.3 per cent from the peak of 5,491.3 points recorded on February 2, 2015.

The latest market sell-off was triggered by the economic uncertainties caused by the Covid-19 pandemic, deepening investors’ paper losses which stand at Sh576.4 billion since the start of the year as measured by the entire stock market capitalisation.

The market shed Sh22.3 billion in Tuesday’s trading alone to close at Sh1.96 trillion compared to Sh1.98 trillion on Monday. Stock market data shows that stocks of large, blue-chip firms are among the most battered.

Since the year begun, Nation Media Group #ticker:NMG, Bamburi Cement #ticker:BAMB and Nairobi Securities Exchange #ticker:NSE (the bourse operator) have seen their stocks drop the most by 73.1, 67.1 and 44.9 per cent to trade at Sh10.1, Sh28 and Sh6.7 respectively.

Safaricom, the largest company on the bourse, has also shed 14.7 per cent over the same period to close at Sh26.4 in yesterday’s trading session.

The pandemic and measures taken to control its spread are set to hurt economic growth in the short term, raising the prospect of reduced corporate earnings and dividend cuts.

The latest projection from the International Monetary Fund (IMF) places the country’s real GDP growth at a mere one per cent this year.

Scores of NSE-listed firms have already warned investors that their earnings will fall by 25 per cent or more in their current financial year, citing depressed demand and restrictions on travel and social activities, among other factors.

Other firms including East African Breweries Limited (EABL) have already suspended dividends. The brewer reported a 39 per cent drop in net earnings to Sh7 billion in the year ended June after sales fell due to closure of bars and restriction of travel in Kenya and Uganda.