Kenya’s stock market is a fallen star, as election rerun sends investors scurrying for the exits
Nairobi — Traders are deserting Kenya’s stock market, a star performer earlier this year, as the unresolved crisis over the country’s presidential election discourages foreign investors.
Volumes traded on the Nairobi stock exchange have slumped to the lowest this year, dropping to less than 46-million shares in the week ended October 6 from as high as 285-million in June.
Values have also dropped, with $870,000 of shares traded on Thursday, down 76% from turnover of $3.6m on August 31, before judges ordered a rerun of the vote.
"The equity market is currently a rabbit trapped in the political headlights," says Aly Khan Satchu, CEO of Nairobi-based Rich Management.
Kenya’s benchmark index, which gained 26% in the 12 months to August 31, has slumped to become the worst performer in Africa and the second-biggest decliner globally since the Supreme Court ordered on September 1 that a new vote be held within 60 days.
That was the first time an African presidential election has been overturned by a court.
The stocks have dropped 6% since the ruling in local currency terms, the most of any benchmark in Africa, and the sixth worst globally.
All three Kenyan equity indices fell in September, the first month that that has happened since March, says Francis Mwangi, head of research at Standard Investment Bank in Nairobi.
Many foreign investors are steering clear of the market as they await "the resolution around our fragile and unfolding political situation," says Alistair Gould, CEO of Nairobi-based African Alliance.
Foreign investors have been net sellers in 2017, for the first time since at least 2011, according to data from the capital markets regulator.
Outflows in September rose to 5.8-billion Kenyan shillings ($56m), the highest since the regulator started keeping records.
Foreign outflows of 11.1-billion shillings in the third quarter were "largely as a result of heightened political uncertainty", says Luke Ombara, director of regulatory policy and strategy at the Capital Markets Authority.
The flows are expected to rebound, "as long as the current situation does not become protracted", he says.