Uncertainty over the presidential election wiped out Sh227 billion in market capitalisation at the Nairobi Securities Exchange (NSE) from August 25 as investors, mostly foreigners jolted by the political uncertainty, exited the market.
Bloomberg data showed that share prices at the Nairobi bourse fell the most in Africa since the Supreme Court ordered a fresh election.
The NSE was ranked the worst performing in the world last week by MSCI Indices tracking frontier markets.
Kenya’s financial markets are expected to pick up after Thursday’s vote if jitters over the presidential re-run subside and investors re-enter the market, analysts have said.
Uncertainty over the presidential election wiped out Sh227 billion in market capitalisation at the Nairobi Securities Exchange (NSE) from August 25 as investors, mostly foreigners jolted by the political uncertainty, exited the market.
Bloomberg data showed that share prices at the Nairobi bourse fell the most in Africa since the Supreme Court ordered a fresh election. The NSE was ranked the worst performing in the world last week by MSCI Indices tracking frontier markets.
Despite political jostling over whether the election would take place, the vote went ahead. “We view this as a positive. (The) vote reduces political uncertainty and gives some clarity on the way forward,” Mbithe Muema, head of equity sales at Exotix Capital, said in a note.
“While we do expect a myriad of petitions, at least there will be a sitting president which allows for continuity of government business. This is important as the Kenyan economy is largely dependent on government spending to spur activity.”
A decision by the apex court on September 1 to scrap President Uhuru Kenyatta’s win and call for a fresh vote in 60 days sent shockwaves in the financial markets.
Withdrawal of the main Opposition candidate, Raila Odinga, from the re-run earlier this month and the resignation of a top electoral official last week further fuelled the political crisis.
The benchmark NSE-20 index, which tracks companies with high capitalisation, fell the most over the period, shedding 7.32 per cent to stand at 3602.56 points last Tuesday when the market closed for a two-day election break. Other indices — the All Share Index (NASI) and the NSE-25 Index — also fell by 2.95 per cent and 4.89 per cent respectively.
Turnover at the NSE has remained subdued as jittery investors adopted a wait-and-see approach.
Slightly over 74 million shares were traded last week, compared to 150 million shares exchanged in the week before the election was nullified.
“We have not seen a big exit from the NSE — in fact volumes have been lacklustre — which has meant that foreign investors were not able to trade out of the market meaningfully,” said Aly Khan Satchu, a Nairobi-based analyst and CEO of Rich Management.
In the bonds market, yields dropped in under-subscribed auctions in recent weeks as liquidity thinned out due to investors preferring to hold their cash in foreign currencies such as dollars.
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