NSE posts double digit returns in 2021 rebound

The Nairobi Securities Exchange (NSE) has given investors a double digit return through the first half of 2021 as the markets rebound from last year’s dip. The NSE primary index comprising of all stocks has posted the highest return at 15.4 per cent through the first six months of the year ahead of the NSE 25 and NSE 20 index whose returns stand at 10.5 and 3.2 per cent respectively. The performance of the equities market continues to be anchored on price gains among large cap stocks including Equity Group, EABL and Safaricom. Nevertheless Equity turnover (trading volumes) have declined by 20.7 per cent over the same period to Ksh.69.2 billion from a higher Ksh.916.7 billion at the same stage last year. At the same time, foreign investors have remained net sellers having withdrawn Ksh.3 billion from the NSE. The net selling position is however narrower than the Ksh.23.4 billion dislodged from the stock market at the same stage in 2020. On the flip-side, the secondary bond market has equally soared at the start of trading for the year having posted a turnover of Ksh.440.5 billion, 53.8 per cent higher than the Ksh.286.5 billion booked last year. This from the increased allocation of funds to government securities as local investors such as banks slow their allocation to alternative investment classes including lending. Regionally, the improved performance places the NSE as the third best performing market in Sub-Sahara behind only Uganda and Ghana whose returns in the year to date (YTD) stand at a greater 16.7 and 36.6 per cent respectively. Nigeria has been the worst performing market with losses of 12.8 per cent as the market suffers knock-on effects of an unstable macro-environment. Currently the NSE is trading at a price to earnings ratio of 13.6 times, 4.9 per cent above the historical average of 12.9 times an indicator of the fair pricing of NSE stocks.

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