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CMA Report Shows Reduced Activity on the NSE in Second Quarter

The Kenyan capital markets recorded depressed activities in the second quarter of this year on the impact of COVID-19.

Latest data from the Capital Markets Authority indicates that all the four markets recorded reduced activities with the derivative counter falling by 15 percent in the month between April to June.

Economic shocks occasioned by the coronavirus pandemic led a depressed performance at the Nairobi Securities Exchange, according to the second quarter report by the Capital Markets Authority.

In the period, the Nairobi Securities Exchange 20-share index shed over 5 per cent in one day, prompting a market halt, sparked-off by panic selling in an already bearish market.

As at the end of quarter market capitalization recorded a 4.38% drop from 2,1 trillion shillings registered in 1Q2020 to 2,01 trillion shillings in 2Q2020 of this year.

Volumes traded increased by 4.51% to 1,421.84 million in 2Q2020 compared to 1,360.48 million in 1Q2020.

Equity turnover for 2Q2020 stood at 40 billion shillings compared to 43.7 billion registered in 1Q2020; a 9.54% drop.

The quarter recorded a net foreign portfolio outflow of 10.2 billion as compared to an inflow of 1.2 billion in 2Q2019.

This drastic change can be attributed to the panic trading brought about by the COVID-19 pandemic.

The derivatives market registered a 15% decrease in trading to 257 contracts traded in 2Q2020 from 302 contracts traded in 1Q2020.

Similarly the Turnover and the Number of deals in 2Q2020 recorded decreased activity of 50% and 16.36% respectively.

During 2Q2020, bond market turnover decreased by 13.50% with 137 billion worth of bonds traded compared to 158 billion traded in 1Q2020.

Average foreign investors Participation in 2Q2020 accounted for 65% compared to 61.14% recorded in 1Q2020 indicating a 3.45% increase in foreign investor participation during the quarter.