Kenyan bourse seeks to refute 'world’s worst performer' ranking by Bloomberg

By John Muchira in Nairobi October 6, 2023

The Nairobi Securities Exchange Plc (NSE) has sought to refute its ranking as the "world’s worst performer" among country indexes tracked by Bloomberg.

The news agency said a massive exodus of foreign investors had precipitated a substantial plunge in the NSE All Share Index, which posted a fourth consecutive quarter of decline at the end of September.

It marked the longest stretch of losses for the Nairobi bourse since 2017, with Kenyan lender KCB Group Plc capping the biggest losses, with its shares down almost 30% during the quarter.

"Bad loans at the bank [KCB] have hurt investor confidence. Kenya’s debt burden has also become a focal point for investors as the country faces skyrocketing energy and food import bills, as well as low foreign-exchange reserves," the news agency wrote on October 2.

"So far this year, Kenya’s stock benchmark has lost a quarter of its value, marking the worst performance among country indexes tracked by Bloomberg." 

In defending the performance of the NSE, the bourse argues that the news agency did not provide a holistic view of Kenya’s public capital markets but rather placed special bias on one market parameter, the NSE All Share Index, and so failed to consider other critical factors, such as float adjustments, dividend yields, and comparative peer market reviews.

“As players in the global financial ecosystem, the performance of listed securities on the NSE is impacted by various macro-economic factors which have seen global equity markets experience significant pressure over the last few months,” the Nairobi bourse said in a statement.

The statement added that the cumulative equity market activity at the NSE for the first half of 2023 recorded a 9% increase in annual terms, and a 72% increase in profit after tax.

“This growth signifies that beneath the recent market challenges there remains an enduring interest and resilience within Kenya’s equity markets,” said the NSE.

The bourse notes that FTSE Russell retained Kenya in its index whilst removing some frontier exchanges, reflecting an appreciation of its structure and performance as well as the market’s viability to attract foreign investors.

Meanwhile, the Morgan Stanley Capital International (MSCI) has ranked the NSE as the worst-performing African bourse in the first nine months of the year in dollar returns.

The MSCI Index, a key source of investment information for foreign investors, that tracks three Kenyan blue chips—telecom Safaricom, lender Equity Group and East African Breweries Ltd (EABL)—found that the Kenya Index shed 41.9% in the period, to stand at 627.4 points.

"A combination of the weakening of the [Kenyan] shilling and share price decline on constituent stocks has helped lower the performance of the index," The East African writes.

Since the start of 2023, the shilling has depreciated against the greenback by 16.9% to exchange at 148.45 units, as per the official Central Bank of Kenya (CBK) rate.

"In shilling terms, the blue-chip NSE 20 Share Index retreated by 10% to 1,508 points in the nine months to September 2023, while the NSE All Share Index was down 25.3% to 95.2 points," according to the publication.

"Investor wealth as measured through market capitalisation dropped by KES498.4bn ($3.4bn) in the period to stand at KES1.487 trillion ($10.03bn)."

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