Investors in the Nairobi bourse have got emerged among the largest gainers globally seeing that the stock market out-performed other asset classes in 2012, driven mostly by blue chip companies and foreign capital inflows.
The Nairobi Securities Exchange (NSE)20-Share Index – the benchmark that tracks changes in prices of a select group of 20 listed firms – closed the year at 4,133.02 points, a 28.95 per cent increase from its opening level of 3,205.02 points.
Total investors’ wealth at the stock market, which is measured by market valuation of all the ongoing companies listed at the NSE, increased by Sh403.76 billion through the year closing at Sh1.272 trillion, a capitalisation level last attained with the 2008 report on Safaricom.
The performance of the NSE has been so strong that it outperformed various other marketplaces tracked by global index providers and data vendors such as for example MSCI and FTSE Group, both located in London.
MSCI ranked the Nairobi bourse simply because the best executing in its Frontier Marketplaces Africa Index, while its Kenya index was the next best performing following the MSCI Turkey Index globally.
“The very best three single country Frontier Marketplaces index performers for 2012 year-to-time included the MSCI Kenya, Nigeria and Estonia Indices which posted returns of 54.16 per cent, 52.82 %, and 44.98 %, respectively,” stated MSCI in a statement capturing the 2012 performance.
This implies that if an investor had found the stocks that are tracked by the MSCI Kenya Index within their precise weights, the value of their portfolio would have increased by more than half as at December 28.
Paul Wachira, the chief executive of AIB Capital, estimated that a great portfolio of stocks in 2012 returned earnings of between 30 and 40 per cent compared to Treasury bills and bank deposits which would have earned traders between 14 and 15 % after rates of interest dropped sharply through the year.
Amos Kosgey, a portfolio supervisor in Apollo Asset Managers, said the currency markets out-performed the true estate sector even, which was slowed up by high borrowing costs at the start of the entire year and jitters about the upcoming General Election in March.
Rising prices of creating materials also damaged owning a home projects. According to real estate consulting firm Hass Consult, designers shelved building projects in the first half of the year as demand for fresh units dropped sharply following a steep increase in lending rates to over 25 per cent.
The slow down in construction is reflected in the Kenya National Bureau of Statistics data which finally shows the sector grew by 0.6 % in the 3rd quarter of 2012 down from 1.4 % and 3.2 per cent in the initial and second quarters respectively.
The growth in production and consumption of cement slowed up by 0 also.6 % and 1.5 % through the than quarter in comparison to expansions of 8.9 and 7.7 per cent, respectively, over a similar period in 2011.
In its third-quarter market report, Hass Consult estimated that returns for house developers stood at 13.81 per cent “across both rental yields and house price appreciation.”