NSE stocks value falls below Ksh.2 trillion

The value of stocks listed on the Nairobi Securities Exchange (NSE) came off the Ksh.2 trillion mark on Tuesday as investor sell-offs continue.

Data from the bourse placed the NSE market capitalization at Ksh.1.99 trillion at the close of trading on Tuesday from Ksh.2.01 trillion on Monday.

This is the lowest valuation of stocks at the exchange in nearly six years since 2016.

According to data from the Capital Markets Authority (CMA)- the NSE market cap has closed above the Ksh.2 trillion mark each year since 2016 with its recent high-close being Ksh.2.59 trillion last year.

So far in 2022, investors have lost nearly Ksh.600 billion in value from stock holdings as a combination of external shocks and domestic concerns intersect to lower the sentiment for investing.

The performance of the equities market so far this year has largely been a factor of heavy foreign investor sell-offs which has hit large-cap stocks such as Safaricom, Equity Group, KCB, Cooperative Bank and Bamburi.

Last week, the NSE slumped to official bear territory for the year with the performance of the Nairobi All Share Index (NASI) falling to negative 20.7 per cent.

Both the NSE 20 and NSE 25 share indexes are also sliding towards the bear mark with year to date (YTD) losses of 12.2 and 17.8 per cent as of May 20.

Foreign investors who cover nearly three quarters of activity at the NSE have remained net sellers so far in 2022 with the net selling position standing at Ksh.5.8 billion ($49.3 million) at the end of last week.

The bear market nevertheless presents opportunities for entrants seeking to buy low and sell high as stocks values stand heavily discounted.

Safaricom’s share price for instance sits way off its year high of more than Ksh.39 a piece at Ksh.26.35 per share as of Tuesday’s close.

Bank stock prices including Equity, KCB and Standard Chartered have meanwhile fallen to Ksh.42, Ksh.35.95 and Ksh.124.25 respectively.

NSE equities are currently trading at nearly 43 percent below their historical price to earnings ratio, mirroring the sharp discounts at play.