Nairobi bourse named the second best performer in Africa, Mid East

Investors at the Nairobi Securities Exchange closed the year 29 per cent richer as growing confidence in the economy pushed share prices up.

Annual market performance statistics released by NSE show that the benchmark NSE 20 Share Index — a key indicator of the market performance — rose by 28.95 per cent to close at 4,133.02 points.

The index had in 2011 closed at 3,205.02 points. The gain places NSE as the second highest gainer among the stock exchanges in Africa and Middle East, after Egyptian Stock Exchange, and eighth globally.

The All Share Index was even higher at 39.41 per cent but it is yet to gain market acceptance as a representative of the market performance, largely due to the short period it has been in the market compared with the NSE 20 Share Index.

Market valuation

In terms of market valuation, the stock market closed the year at Sh1.27 trillion against Sh868 billion posted at the close of year 2011.

Growth in investor confidence has defied past trends where an election period is characterised by capital flight as investors move their money to other countries owing to fear of political uncertainty.

Low inflation, falling interest rates and stable currency, compared with last year, has also played a key role in price rally.

From a high of 18.93 in December 2011, inflation has for 13 consecutive months fallen to 3.2 per cent in December last year.

The shilling closed the year at an average rate of Sh84.6 against the dollar during the period, from a low of Sh107 last year, with interest rates falling to average 18 per cent from highs of over 24 per cent.

Confidence that the economy will outperform 2011 and better the pace in 2013 also played a key role as this is an indication that companies will benefit from the improved economic conditions.

Uchumi Supermarket shareholders were the biggest beneficiaries of the price rally, closing the year more than double the opening price at Sh19.10, up 148 per cent.

The retail chain’s shares were relisted mid last year after a successful turnaround after the collapse of the firm in 2005.

Good financial results and expected regional expansion were key drivers.

Crown Paints came in second at 107 per cent as the company is seen to benefit from the ongoing construction boom.

And despite facing increased regulation, tobacco manufacturer BAT doubled its share price on account of increased export business.

Pan Africa Insurance and KCB closed the top five gainers list.

In all, a total of 36 out of 61 listed companies returned positive gains on their share price while 18 dropped.

Kenya Airways and East Africa Portland Cement were the top losers on account of poor financial results, wrangles with employees and, for Portland, boardroom wars.