Combined investors wealth at the Nairobi Securities Exchange (NSE) has dipped below Sh2 trillion for the first time since March while the shilling has extended record low run to the dollar ahead of planned review of Covid-19 control measures.
NSE market capitalisation yesterday dropped to Sh1.998 trillion meaning that investors have suffered Sh134.6 billion loss since President Uhuru Kenyatta relaxed Covid-19 containment measures on July 6.
Select blue chip stocks like Safaricom, Equity, East African Breweries Limited (EABL) and Cooperative Bank of Kenya have all been on downward trend, shedding Sh124.6 billion during this period.
Head of research at Genghis Capital Churchil Ogutu said foreign investors are cashing out on the mid-June rally when the value of all stocks hit Sh2.215 trillion given that the outlook of many company performance is negative going forward.
“Foreign investors have been exiting in the last three weeks or so and in particular from the top five counters.
“Considering the price rally in June, investors are now in profit-taking mode since they don’t see an extended rally in this environment” said Mr Ogutu.
“Many investors don’t see the reopening of the economy changing the fundamentals of most of these companies and so they are still pricing in Covid-19 as they sell.”
Banks have for instance restructured loans worth Sh679.6 billion or 23.4 percent of their loan book by end of May due to Covid-19 hardships facing their customers.
The shilling has also come under pressure, extending the record low run against the dollar to 107.9 units yesterday. This marked the fifth straight trading day of losing.
Central Bank of Kenya blames the weak performance on unevenly matched demand and supply of dollars in the interbank market.
Currency traders said the Kenya shilling has come under pressure from merchandise importers and multinational companies buying dollars to meet obligations such as raising stock levels.
The poor run of NSE and the shilling is despite President Uhuru Kenyatta having relaxed Covid-19 control measures in bid to gradually reopen the economy despite case load nearing 10,000.
President Kenyatta lifted cessation of movement in and out of Nairobi, Mombasa and Mandera counties and announced resumption of local air transport.
Between July 6 and yesterday, Safaricom has lost Sh118.19 billion while Co-op Bank lost Sh4.99 billion as, EABL and Equity shed Sh1.18 billion and Sh0.8 billion respectively. Only KCB has gained Sh0.57 billion.