The Nairobi Securities Exchange has issued a strongly worded rebuttal to a recent Bloomberg News analysis that labeled Kenya’s stock market the world’s worst performer this year.
In a lengthy statement, the exchange took issue with the Bloomberg article dated October 2 that cited the decline in the NSE All Share Index as evidence of the market’s poor performance. The NSE said the article “did not provide a holistic view” and “placed a special bias” on just one parameter while ignoring other critical factors.
“Whilst the NSE respects Bloomberg’s commitment to providing financial news, we believe the article did not provide a holistic view of Kenya’s public capital markets and placed a special bias on one market parameter, that is, the NSE All Share Index, and failing to consider other critical factors such as float adjustments, dividend yields and comparative peer market reviews, that investors consider before making investment decisions,” the statement read.
Specifically, the exchange highlighted recent reviews by major market index providers FTSE Russell and MSCI that affirmed the viability of Kenya’s market for foreign investors.
“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,” the NSE noted.
The exchange also pointed to concrete signs of growth and resilience in Kenya’s capital markets this year, despite the global pressures that have weighed on equities worldwide. The cumulative equity market activity in the first half of 2023 showed a 9% increase over the same period last year, while the NSE itself recorded a sizable 72% rise in profit after tax.
Read more: Kenya lifts mining ban, cracks down on 3,000 illegal operations
“This growth signifies, that beneath the recent market challenges, there remains an enduring interest and resilience within Kenya’s equity markets,” the statement read.
Additionally, the NSE highlighted the significant expansion witnessed in Kenya’s fixed income securities trading, with bond trading volume hitting a two-year high in September.
“This surge in fixed income trading activity underscores the depth and potential of Kenya’s capital markets, extending beyond equities,” the exchange asserted.
As further evidence of its commitment to providing a “world-class market infrastructure,” the NSE said it has introduced two new market indices this year – the NSE 10 Share Index and the NSE Bond Index – to better track the most liquid stocks and benchmark bonds.
The exchange concluded by encouraging investors to take advantage of attractive valuations in Kenyan markets that remain open despite challenges. It welcomed a more nuanced examination of the opportunities available amid the diverse offerings beyond equities now available there.
“We welcome a more comprehensive examination of Kenya’s capital markets landscape to uncover the diverse opportunities they present to the investment community,” the statement said.
