The Nairobi Securities Exchange (NSE) regained some of its losses on Friday, driven by a rally in large bank stocks. This pushed investor wealth back to the Sh4 trillion level. Market capitalization rose Sh56.24 billion to close the week at Sh4.004 trillion. The gain comes after a losing streak that saw the exchange's valuation drop by Sh337 billion since its all-time peak of Sh4.285 trillion on September 3.
The recent slide in the market opened an opportunity for investors to buy blue-chip stocks at a discount. These stocks had recently touched all-time highs. Co-operative Bank of Kenya led the gainers among the five large listed companies, adding 8.9 percent to Sh34.80 per share. This translated to a Sh16.7 billion jump in valuation to Sh204.7 billion. The bank's significant gain contributed to the overall market recovery.
Other large stocks also recorded gains on Friday. Equity Group's market capitalization rose Sh9.43 billion to Sh371.7 billion after its share added 2.6 percent to Sh98.50. KCB Group's valuation increased Sh8.8 billion to Sh279.6 billion as its share price closed the day 3.3 percent higher at Sh87 per unit. Additionally, Safaricom added Sh4 billion to its valuation to Sh1.41 trillion, with its share price rising by 0.3 percent to Sh35.30.
These large stocks had accounted for the bulk of the losses seen over the previous week-and-a-half. Equity, KCB, and Co-op Bank traded at all-time highs of Sh106, Sh98.55, and Sh38.55 per share respectively as of September 3. Safaricom was trading at a multi-year high of Sh37.94 per share. The stocks had rallied throughout August, triggering a selloff by investors looking to actualize capital gains.
The sell-off was partly driven by rising global risks. Attacks by Yemeni Houthi rebels on the Red Sea shipping channel caused a jump in benchmark oil prices. This triggered fears of a new round of higher global inflation. The yield on US 10-year bonds hit the key five percent threshold for the first time since 2023, influencing capital movement across the globe.
The US Federal Reserve also raised its benchmark rate by 0.25 percentage points last week. This signaled concerns of higher inflation in the world's largest economy. The benchmark US 10-year bond rate and the Fed rate are closely watched gauges of market inflation expectations. They play a significant role in shaping investor sentiment and capital flows.
The Nairobi Securities Exchange is expected to continue navigating these global and local market dynamics. Investor sentiment remains cautious, with market participants closely monitoring economic indicators and corporate performance. The exchange's ability to maintain its current valuation levels will depend on various factors, including investor confidence and global market trends.
Key points
- The Nairobi Securities Exchange reclaimed its Sh4 trillion valuation on Friday.
- Large bank stocks, including Co-operative Bank of Kenya and Equity Group, drove the market gain.
- Global risks, including rising oil prices and US interest rate hikes, influenced investor sentiment.
