Kenya’s capital market showcased a mixed performance in the first half of 2024, reflecting a complex interplay of gains and declines. According to the Capital Markets Authority (CMA), investors’ paper wealth at the Nairobi Securities Exchange (NSE) grew by at least Sh100 billion in the six months to June 30, 2024. This significant increase in market capitalization highlights the resilience and potential of Kenya’s equity market amidst global economic uncertainties.
Market Capitalization and Equity Turnover
The CMA’s data reveals that the total market capitalization for the quarter reached Sh1.71 trillion, up from Sh1.6 trillion in the first quarter of 2024. This growth was driven by a substantial increase in equity turnover, which rose by 48.91 percent to Sh28.39 billion from Sh19.07 billion in the previous quarter. This uptick indicates heightened investor activity and confidence in the market.
However, the overall performance of market indices showed a contrasting trend. The NSE 20 Share Index and NSE All Share Index declined by 5.47 percent and 3.18 percent, respectively, during the same period. The volume of shares traded also saw a slight decrease of 0.65 percent, settling at 1.09 billion shares.
Year-on-Year Growth
Despite the quarterly declines, the year-on-year analysis paints a more positive picture. The NSE 20 Share Index rose by 5.18 percent, while the NASI increased by 2.33 percent. The volume of shares traded surged by 42.54 percent, equity turnover nearly doubled with a 97.23 percent increase, and market capitalization grew by 2.66 percent. These figures underscore the market’s robust recovery and growth over the past year.
Treasury Bonds Market
In the primary market for Treasury bonds, the government issued a total of six bonds in the second quarter of 2024. This included six re-opened bonds and seven tap sales, with no new issues. The government successfully raised Sh183.55 billion against a target of Sh185 billion, demonstrating effective fiscal management and investor confidence in government securities.
The secondary bonds market, however, experienced a significant downturn. Turnover declined by 29.4 percent to Sh323.61 billion, down from Sh458.20 billion in the first quarter of 2024. Despite this quarterly decline, the year-on-year comparison shows a remarkable 119.54 percent increase in bond turnover from Sh147.41 billion in the second quarter of 2023, reflecting a strong long-term growth trajectory.
Derivatives Market and Collective Investment Schemes
The derivatives market reported a 44.66 percent decrease in deals, closing the second quarter of 2024 with 1,005 deals compared to 1,816 deals in the previous quarter. Turnover also dipped by 16.53 percent to Sh37.18 million from Sh44.54 million in the first quarter. However, the traded volume of contracts spiked by 135.33 percent, reaching 746 contracts from 317 contracts in the first quarter of 2024.
Collective Investment Schemes (CISes) continued their upward momentum, with Total Assets Under Management (AUM) growing by 4.8 percent to Sh225.36 billion from Sh215.05 billion in the previous quarter. A significant portion of these assets remained allocated to Government of Kenya securities, highlighting a preference for stable and secure investments among CIS managers.
Strategic Initiatives and Corporate Actions
The 2024/2025 financial year presents an opportunity for market stakeholders to enhance the investment environment in Kenya. CMA CEO Wycliffe Shamiah emphasized the importance of collaborative efforts to create a conducive environment for investments, aiming to attract both local and international investors to the Kenyan market.
During this period, Nation Media Group PLC completed a share buyback program conducted through the NSE. The company repurchased 19,029,516 ordinary shares, equivalent to 10 percent of its adjusted issued share capital. This move reduced the company’s issued share capital to 171,265,647 ordinary shares available for trading on the NSE, with the repurchased shares now held as treasury shares. This successful buyback program is expected to enhance shareholder value and signal the company’s confidence in its long-term prospects.
Outlook and Future Prospects
Looking ahead, the NSE and CMA are optimistic about the market’s future. The continued growth in market capitalization, increased equity turnover, and strategic corporate actions like share buybacks are positive indicators of a resilient and dynamic market. However, the mixed performance in different market segments underscores the need for continued vigilance and strategic initiatives to address emerging challenges.
The government and regulatory bodies are expected to continue their efforts to improve market conditions, enhance transparency, and foster investor confidence. Initiatives to boost financial literacy, promote sustainable investment practices, and leverage technology for market operations will be crucial in sustaining the positive momentum and attracting more investors to the NSE.
In conclusion, while the first half of 2024 presented a mixed bag of outcomes for the NSE, the overall growth in investor wealth and the strategic initiatives undertaken by key players indicate a promising future for Kenya’s capital market. Continued collaboration between stakeholders, effective regulatory oversight, and a focus on sustainable growth will be key to unlocking the full potential of the NSE and driving long-term economic prosperity.
