The value of shares traded at the Nairobi Securities Exchange (NSE) has fallen to a nine-month low as investors shy away from the market due to low and flat share prices.
Traded turnover at the bourse in July stood at Sh9.7 billion down from Sh13.6 billion in June.
This is the lowest monthly turnover since October last year when the Presidential poll rerun affected economic activity across the country.
Investor wealth as measured by market capitalisation fell by Sh57 billion during the month to Sh2.519 trillion. The fall in turnover has coincided with a more cautious approach by local investors in light of the lower share prices since the beginning of the second quarter.
Local investor participation in July stood at 32.3 per cent as foreigners accounted for 67.7 per cent of total traded turnover. Analysts say it is likely prices will remain flat until there is a spike in trading activity.
“We are observing a wait-and-see approach from most investors especially from the local desk. We expect most of the counters to oscillate around the current levels with price changes seen only in the wake of increased demand or supply,” said Genghis Capital in a market note.
The main indices returned mixed results with the NSE 20 share index eking out a 0.3 per cent gain during the month, on the back of gains in a number of blue chips including EABL #ticker:EABL (up 3.2 per cent), Equity Holdings #ticker:EQTY (up 3.8 per cent), BAT Kenya #ticker:BAT (up 3.3 per cent and KCB #ticker:KCB (up 1.6 per cent).
On the other hand, the NSE All Share Index ended the month 2.2 per cent lower, largely due to the pull-down effect of the largest listed company Safaricom #ticker:SCOM, which was 5.1 per cent down in July.
Safaricom’s movement has a significant effect on the market-cap weighted NASI, given that the telco accounts for 44.5 per cent of the market’s total capitalisation.
The NSE 20 on the other hand is price weighted, hence the bigger effect of stocks like EABL and BAT that have a high nominal price.
On a year-to-date basis, however, the NSE 20 share index is down 11.4 per cent and the NASI 0.4 per cent.