Nairobi Bourse Ranked World’s Third Best Performer

By AGENCIES

A buoyant Nairobi Securities Exchange (NSE) defied subdued national and global economies to become the third best performing in the world, driven by share price gains since the beginning of the year.

The market’s all-share index, NSE ASI, rose by more than a fifth in the first half of the year, making the Nairobi bourse the third best performing stock market worldwide after the Venezuela and Egypt exchanges, according to Bloomberg – a global markets data service.

At the close of business on Thursday, the NSE 20 Share index had risen by 15.75 per cent to 3,709.84 points since the beginning of the year.

The FTSE 15 and FTSE 25 indices rose 16 per cent to close at 105.34 and 108.13 points respectively compared to the NSE ASI’s 18.33 per cent rise to 80.50 points, pointing to better tidings for investors who put their money in the Nairobi bourse.

Market analysts say the share price gains are linked to the huge dividends that the companies have declared and expectations of positive performance by the listed firms as inflation and interest rates drop.

The Nairobi bourse has also attracted increased investments from international funds looking for high returns in Africa away from imperilled global markets and in response to a stabilising Kenyan currency.

“The fact that inflation and interest rates have been falling signals that there might be a shift of funds to equities,” said Samuel Gichohi, a senior research analyst at NIC Securities, adding that despite the tough economic climate, listed companies have paid good dividends.

After dropping consistently between January and May, interest rates on Treasury bills this month hit an upward trend attracting investors back to government debt.

Yields on three-month, 182-day and one-year Treasury bills peaked at 20.799, 20.914 and 21.961 per cent in January respectively, after rising consistently through most of last year before setting on a descent.

“What is happening in Europe and other Western countries has made Kenya attractive especially for funds looking for growth stocks,” said Joshua Njiru, the general manager at Madison Asset Managers.

“They are obviously looking to where there is potential and that is in Africa.”

Fund managers, particularly those with large portfolios, sometimes buy shares in a particular index according to how they are weighted in the index to show their performance.

This means that such investors who may be trying to mimic the performance of Kenyan indices have seen their portfolios gain as much.