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Vibrant bonds market keeps investors trading at Nairobi bourse

Xinhua, August 15, 2016 Adjust font size:

Nairobi Securities Exchange (NSE) vibrant bonds market has kept investors trading at the bourse as the bear-run at the equities segment remains a turn-off.

Investors at the securities market have shifted to the bonds as prices of various stocks continue to tumble, pushing down key indices that include market capitalization, a measure of the bourse's wealth, and the indicative 20 Share Index.

Bonds turnover, therefore, currently surpasses equities' trading in every session unlike months ago when the long-term securities segment attracted low dealings.

An analysis of data from the NSE showed that an average of 9.9 million U.S. dollars worth of bonds are traded at the bourse every day, up from less than half the amount.

A total of 58 million dollars worth of bonds were transacted at the bourse last week, a slight decline from 64 million dollars the previous week.

At the equities market, according to data from the NSE, weekly trading last week barely hit 12 million dollars, down from 24 million dollars in the week ending Aug. 5.

The NSE equities market is dominated by sensitive foreign investors at 80 percent, who trade mainly on about five counters that are the most liquid which include Safaricom, Kenya Commercial Bank, Equity Bank and East African Breweries Ltd.

Save for Safaricom, most of the stocks in the 20 Share Index have shed their prices, leading to increased foreign investors' sales.

NSE data shows that 44 out of 62 stocks at the Nairobi bourse have recorded a negative return, with equity turnover decreasing 21 percent in July as the number of shares traded fell by 10 percent.

Analysts have noted that investors are getting attracted to bonds due to increased interest rates.

Yields on the bonds trading at the NSE range between 11 and 14 percent, which are even higher than those at the debt market, making the securities attractive.

The yield curve has exhibited an increasing upward trend, especially for one to five years tenure securities. Endit