NSE Dips 26% in New Meltdown

Nairobi Securities Exchange (NSE) has taken a hit, making it among the worst performing exchange platforms year-to-date relative to the list of 14 most closely monitored exchanges in Africa.

The bourse slumped 26 percent year-to-date, meaning that investors have closed 26 percent of their investments compared to 12 months ago, says data on African-markets.com. Data from Genghis Capital also shows the NSE is the worst performing on the continent in a list of top ten exchanges.

Genghis says that Kenya’s NSE went down 24 percent year-to-date while Zambia is the best performing at 19 per cent with Nigeria being up by 10 per cent.

The market has been on meltdown since October last year, hitting its lowest between June and July this year, before rising, on account of a peaceful transition. The market has however taken another nose dive raising concerns.

“Cracks in the latest bear market rally widened with the market remaining bearish for the second consecutive week,” said Genghis in an update.

Locals continued to drive activities as foreign investors stayed away from action, perhaps driven by high interest rates in the United States.

“Foreigners were on a net exit position with outsized exits on Safaricom to clock net outflows of Sh1.5billion week on week,” Genghis said.

The low performance comes even as the government says it will be looking to raise funds for development through the stock market raising concerns whether this will be the ideal time to float the companies.

Instead of borrowing money from foreign markets, President William Ruto has said that his administration will raise money for government projects through listing on the Nairobi Stock Exchange.

“I am eager for GoK to raise funds from the Nairobi Securities Exchange for our development.”

Foreign participation at the bourse has dropped to 34 percent from a normal average of 70 percent.

Safaricom which is the most dominant counter is currently trading at Sh24 per share but Genghis says the stock should be at Sh45 a share under normal circumstances.

“We believe that the stock is trading a deep discount, which offers investors an attractive entry point,” said Weslye Manambo of Genghis.

Instead of borrowing money from foreign markets, President William Ruto has said that his administration will raise money for government projects through listing on the Nairobi Stock Exchange.

Tuesday morning at the Exchange Building in Westlands, he presided over the opening of the Nairobi Securities Exchange (NSE) Market Place.