The Nairobi Stock Exchange (NSE) has experienced a notable surge in trading activity, resulting in a significant increase in investor wealth by KSh 351 billion over a span of seven weeks, from February 15th to April 4th, 2024.
During this period, market capitalization, which serves as a measure of investors’ wealth, rose to Ksh 1.772 trillion on April 4th, 2024, compared to Ksh 1.421 trillion recorded on February 15th, 2024. This surge can be attributed to the appreciating value of the Kenyan shilling against the US dollar, driven by positive developments such as the successful issuance of a US$1.5 billion Eurobond and the oversubscribed KSh 75 billion infrastructure bond. These factors have helped alleviate concerns about a potential dollar shortage.
The increased appreciation of the Kenyan shilling against the US dollar has led to a notable rise in trading activity on the NSE. During the seven-week period, equity turnover reached KSh 15.8 billion, with a total volume of 867.63 million shares being exchanged.
Furthermore, the Nairobi All-share stock index, which reflects the performance of all securities on the NSE, has surged by an impressive 49% when measured in dollars since the beginning of the year. This rebound comes after a significant 43% decline observed in 2023.
In response to these market dynamics, the Capital Markets Authority (CMA) of Kenya recently unveiled a strategic plan aimed at enhancing market performance, investor wealth, and overall market stability. This plan aligns with national and regional development agendas, with a focus on promoting stock market growth and resilience.
Key areas of focus in the CMA’s strategic plan include customer base growth, financial sustainability, performance and risk management, human resource capacity enhancement, and environmental, social, and governance practices. Additionally, the plan emphasizes the importance of financial inclusion, digital assets, and regulatory reforms to drive market efficiency and transparency.
Global asset manager BlackRock Inc. recognizes the significant investment opportunity presented by Kenyan stocks. Citing a stable political backdrop, improving macroeconomic outlook, and attractive valuations, BlackRock perceives favorable conditions for investment, with the stock market trading at five times PE.
