The average daily equity turnover at the Nairobi Securities Exchange (NSE) fell sharply to touch lowest level in four years in October as investors pumped the available cash into the fixed-income market.
Market data compiled by Standard Investment Bank (SIB) shows that investors traded on average Sh392.6 million worth of shares daily last month, the lowest since August 2012.
September’s daily trade was Sh803 million, with the average for the first three quarters of the year being Sh634 million. Last year the market was averaging Sh820 million in daily trade.
On October 31, the NSE posted the lowest single-session turnover in over three years at just Sh63 million.
On the other hand, the government was able to raise Sh130.2 billion in accepted bids from primary Treasury bill and bond issues in October—which consisted of Sh100 billion in Treasury bills and Sh30 billion in an infrastructure bond.
“October recorded a low turnover partly due to the fact that most activity had shifted to the fixed income market (both primary and secondary). Most of the primary auctions recorded oversubscription and the daily bond turnover in the secondary market was equally high,” said Kingdom Securities senior analyst Mercyline Gatebi.
In the past year the NSE has firmly settled into a bear run that has seen the main index sink to a five-year low, whereby the NSE 20 share index is 20 per cent worse off in the year to date.
The stock market has also felt the effect of reduced activity by foreign investors as they show concerns over the continued low participation by their local counterparts.
“Foreign investors, who had accounted for 80 per cent of the trades in September cut back last month (to about 67 per cent). They are now at a point where they are seeing local investors not participating in the market and asking themselves whether the locals have information on the market that they (foreigners) don’t have,” said SIB head of research Francis Mwangi.
“Prices have also stagnated. Trading usually picks up when the prices of shares move one way or the other.”
