Nairobi Stock Exchange Responds After Being Ranked Worst Globally

Nairobi Security Exchange (NSE) has responded to a Bloomberg article that ranked it as the world’s worst performing stock exchange in the world.

In a statement on Wednesday, October 4, NSE affirmed the resilience of the Kenya’s capital market adding that the analysis did not provide a holistic view of Kenya’s public capital markets and placed a special bias on one market parameter.

 “The Nairobi Securities Exchanges (NSE) notes with concern a Bloomberg article dated 2nd October 2023, that portrays the Kenyan stock market as the world’s worst performer, citing a decline in the NSE All Share index,” read the statement in part.

Further, NSE said the analysis failed to consider other critical factors such as float adjustments, dividend yields and comparative peer market reviews, that investors consider before making investment decisions. 

Moreover, the statement noted that the performance of listed securities on the NSE is impacted by various macro-economic factors since it is a player in the global financial ecosystem.

“The above notwithstanding, the cumulative equity market activity for the first half of the year 2023, displayed a noteworthy 9% increase when compared to the same period last year,” said NSE.

 Additionally, the NSE asserted that it recorded a notable 72% increase in profit after tax.

According to NSE, this growth signifies, that beneath the recent market challenges, there remains an enduring interest and resilience within Kenya’s equity markets.

 Further, NSE said Kenya’s fixed income securities market has experienced significant growth with the monthly value of bonds traded at the NSE reaching a two-year high in September 2023.

“The market also recorded a historical single day high trading of Ksh.16 5 billion worth of fixed income trades in the same month.

This surge in fixed income trading activity underscores the depth and potential of Kenya’s capital markets, extending beyond equities,” stated NSE.

NSE Top in Africa

Additionally, NSE revealed that it recently introduced two new market indices, the NSE 10 Share Index (N10) and the NSE Bond Index (NSE-BI).

This provides a performance tracker for the ten most liquid stocks and listed benchmark bonds respectively.

In addition, NSE said it is among leading exchanges in Africa offering 5 public market platforms and 1 private market platform.

“Kenya’s markets have demonstrated resilience, and even amidst challenges, they remain open to investors seeking value. We encourage investors to take advantage of the current attractive valuations that the markets present,” read the statement.

Also, NSE explained that it welcomes a more comprehensive examination of Kenya’s capital markets landscape to uncover the diverse opportunities they present to the investment community. 

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Other Analysis

The review by Bloomberg comes on the back of an assessment undertaken by FTSE Russell on 11th August 2023, that sought to review the treatment of the equity indices of Kenya and other exchanges in the frontier markets.

NSE said FTSE Russell retained Kenya in its index whilst removing some frontier exchanges, which reflects an appreciation of the markets structure and performance as well as the markets viability to attract foreign investors. 

In addition, the Morgan Stanley Capital International (MSCI) in its August 2023 review of Kenya, noted that the market dividend yield stood at 8.63% compared to 4.28% for the peer average group of stocks exchanges in the MSCI Frontier Markets Index. 

Bloomberg Ranks NSE World’s Worst Performer

According to the Bloomberg analysis, Kenyan stocks are extending a selloff that has taken the country’s benchmark index to the steepest losses in the world.

“The NSE’s all-share index posted the fourth consecutive quarter of decline in September, the longest stretch since 2017,” read part of the article.

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About NSE

The Nairobi Securities Exchange (NSE) is the principal securities exchange in Kenya.

It offers a world class trading facility for local and international investors and issuers looking to gain exposure to Kenya’s and Africa’s economic growth.

NSE plays a vital role in the growth of Kenya’s economy through mobilization of domestic resources and international capital.

The NSE is a founder member of the African Securities Exchanges Association and the East African Securities Exchanges Association.

Further, it is a full member of the World Federation of Exchanges and the Association of Futures Markets, and a partner Exchange in the United Nations Sustainable Stock Exchanges Initiative (SSE).

NSE operates under the jurisdiction of the Capital Markets Authority of Kenya.