Nairobi bourse investors suffered loss in the first month of the year as the 20-Share Index sank to negative territory for the first time in five months, under pressure from foreign investor selloffs. The Nairobi Securities Exchange (NSE) trading data for January shows the NSE 20-Share Index, which tracks performance of 20 select stocks at the bourse, lost 1.4 per cent to close the month at 4,856 points despite having crossed past 5,000 points in the opening weeks of the year. "Foreign participation remained largely on the selling window with demand easing off from most of the counters. We expect the dip to continue, however, in a shorter period. The lower prices and valuations thereafter will offer investors entry opportunities, which will drive demand," said ABC Capital in a market analysis note. The NSE last recorded a losing month in August 2013 , when the 20-Share Index dropped by 1.87 per cent fuelled by big drops in prices of blue-chip counters. READ: Foreign investor sell-offs at NSE as contagion hits Last year the NSE 20-Share Index gained 19 per cent, while the NSE All Share Index, which tracks performance of all listed companies, went up by nearly 50 per cent. The only other months that recorded declines in price indices were April, when the bourse dropped 1.97 per cent, and June when it went down 8.2 per cent following the first announcement of the US Federal Reserve Bank's intention to cut back its stimulus programme. Now in its second month, the US Fed economic stimulus cutback will see the monthly injection of $85 billion into the world's biggest economy scaled down by $10 billion every month. The tapering has raised investor fears with frontier economies such as Kenya feeling the effect of the global liquidity crunch. In capitalisation terms, the stock market lost Sh22.7 billion in January, having opened the year at Sh1.92 trillion. The bourse recorded gains for the first three weeks of January, touching a high of 5,092 points for the 20-Share Index and an all-time market valuation high of Sh2.03 trillion by the close of the third week. The last week of January was, however, marked by a sharp retreat under pressure from foreign investor selloffs, believed to have been in reaction to the scaling back of the bond buying programme by the Fed. The biggest gainers in January were drawn from medium and small cap counters led by Car & General , which was up 38 per cent to Sh41.50. The company has a market capitalisation of Sh1.4 billion. Other top gainers were BOC Gases — up 36 per cent to Sh170 with a capitalisation of Sh3.3 billion — and Sasini , up 29 per cent to Sh18.95and a capitalisation of Sh4.4 billion. The biggest company on the top gainers list was Britam at ninth position with a capitalisation of Sh34 billion, having gained 19 per cent to see the month out at Sh18.05. Leading the decliners was Carbacid , which shed 22 per cent in price to close the month at Sh40, while KenGen dropped 11 per cent to close January at Sh12.05. EABL , the second biggest company at the bourse with a capitalisation of Sh204 billion, lost 10 per cent to stand at Sh259. The third biggest company, KCB , was down 8.5 per cent to close the month at Sh43.25, leaving it with a capitalisation of Sh129 billion. Kestrel Capital , in its 2014 macroeconomic and equities outlook for Kenya , however, maintains a positive outlook on the market, saying the NSE can ride out the storm caused by the Fed cutback. Kestrel says improved financial performance and increased local investor participation will support the equity market, pegging this on the Eurobond issue expected later this month, which is expected to lower government appetite for borrowing hence lowering yields on government securities. Lower yields could turn the attention of fund and pension managers to equities in search of better returns.
Most Popular Stories
- Obama Administration Releases Proposal to Regulate For-Profit Colleges
- Motley Crue's Nikki Sixx Marries Model Courtney Bingham
- Chinese e-Commerce Giant Alibaba Gears for IPO in U.S.
- Some California Cities Seeking Water Independence
- Apple, HP, Intel May Take a Hit from Slowdown in Smartphone Sales Growth
- FDIC Files Lawsuit on Behalf of Banks Allegedly Hurt by Libor Scandal
- SoCalGas Reaches Record Spend on Diversity Suppliers
- Will Missing Malaysian Jet Prompt Aviation System Change?
- Keurig Adds Peet's coffee, Alters Starbucks deal
- Natural Gas Discovery Could Lead to Cleaner Fuels