Nairobi bourse investors' wealth shrinks as share prices fall

Investors at the Nairobi Securities Exchange (NSE) are facing turbulence for a third consecutive year as drop in prices of various stocks hits their wealth.

Market capitalization, an index that measures shareholders wealth, has dropped considerably in the last two months, an indication of share price erosion.

Since mid-June, investors have lost 829 million U.S. dollars at the market as top stocks tumble.

The bulk of investors' wealth during the period has been eroded in the second week, where the key index fell by 642 million dollars due to drop in share prices that made foreign investors increase outflows.

Telecom and banks' stocks top the list of those whose prices have been on downward spiral affecting investors' wealth.

Last week, leading telecom Safaricom shares slumped by over 2 percent to 0.17 dollars ending a bullish run that had helped push up market capitalization and the NSE 20 Share Index.

The banking sector shares too recorded a huge slump last week of between 1 and 3 percent, eroding market capitalization.

Kenya Commercial Bank Group, the largest financial institution at the bourse by capitalization, has recorded one of the biggest erosion.

Investors' confidence in the banking industry has generally plummeted with stocks of Equity Bank and Cooperative Bank falling.

Central Bank of Kenya has blamed the poor performance of the capital market especially in the last one week where the NSE lost 642 million dollars to Britain's vote to leave the European Union.

Besides the jitters by the exit from Britain, the bourse performance has been affected by tight liquidity in the money market that has kept the debt market interest rates attractive for many investors.

Analysts have also attributed the turn of events to expected announcement of lower earnings by several listed companies in the East African nation.

They warned that it may be hard for investors to make any money from the securities' market this year.

Investors' wealth at the Nairobi bourse in 2015 dropped by about 6 billion dollars, having started the year at a high of 26 billion dollars. Endit