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High appetite for bonds lifts turnover at Nairobi bourse

Xinhua, February 28, 2015 Adjust font size:

Bond turnover at the Nairobi Securities Exchange (NSE) increased by over 198 percent this week as investors showed strong appetite for the long-term securities.

Turnover rose from 77 million U.S. dollars the previous week to 230 million dollars, one of the biggest gains at the segment since the start of the year, according to data from NSE.

Analysts from NSE and the Central Bank of Kenya (CBK) attributed the rise to increased appetite for government bonds as investors look for higher returns in the securities whose yields at bourse and the debt market are as high as 13 percent.

The Kenyan government last week offered a two-year bond and a 10-year bond worth 275 million dollars. The bonds attracted bids worth 549 million dollars, a 204 percent subscription.

"The performance of the two bonds and rise in demand of the long-term securities at the NSE indicates high appetite for the financial assets in the market," said CBK analysts in their analysis received Saturday.

The number of bonds deals at the market increased to 116 from 59 deals traded last week.

The equities segment at the Nairobi bourse also recorded significant gains as the market stabilised a week after brokers threatened to call a strike following a row over collection of capital gains tax.

The NSE 20 Share Index closed the week at 5,491.37 points, about 0.05 higher than the previous week. On the other hand, Nairobi All Share Index ended the week at 175.70 points, a marginal rise from the previous week.

Equity turnover rose to 63 million dollars, an increase of 15 percent from the previous week.

"Shareholders' wealth reflected in market capitalisation grew to 27 billion dollars this week, up from 26.8 billion dollars. Increased supply of shares and rising prices saw equity turnover increase by 14.59 percent this week," noted the analysts from CBK.

FTSE NSE Kenya 15 Index, which measures stocks performance of 15 largest companies by market capitalisation, closed the week at 2.15 percent higher while the FTSE NSE Kenya 25 Index, which measures the 25 most liquid stocks at the NSE, was 2 percent up.

Telecommunication and technology, banking and energy and petroleum were the top three most active sectors.

They contributed 40 percent, 30 percent and 10 percent of the total shares traded respectively. Agricultural sector was the least active with about 200,500 shares traded in the week. Endi