Rush to buy low increases the value of stocks at NSE

The month of March and April 2020 were one of the worst months at the Nairobi Securities Exchange in the recent months, thanks largely to the COVID-19 pandemic. Immediately the first case was announced in the country, stocks at the NSE went stumbling, causing the bourse to lose shs 120 billion in a single day by March 16th.

The low performance at the stock exchange but opportunistic investors to reconsider their tactic, where in the month of April they went into a buying a spree that made it possible for the NSE to regain some of the losses recorded in March. By the end of April, the NSE had gained back shs 264 billion – driving the value of the NSE to a high of shs 2.26 trillion, but still way below the shs 2.6 trillion that had been set on January 10th when no one still thought COVID-19 was a Chinese affair.

The stocks that have attracted the speculators are just the usual culprits – Safaricom, KCB, Equity and EABL whose exchange value account for 84% of the gains made. “The rally can be partly attributed to Safaricom, which has seen a spike in foreign investor interest. While foreign investors were selling banking stocks, local investors have been buying,” Churchill Ogutu Senior Research Analyst at Genghis Capital said. Ironically, it is the same companies that investors had dumped immediately COVID-19 was reported in Kenya.

Of the gainers, we have Safaricom increasing its share value by shs 158 billion, KCB by shs 24 billion, Equity by shs 33.5 billion while EABL, whose stock is the only one that has been on the rise this morning, gained Kshs 22 billion in April.

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The opportunistic investors bought the stock with the hope that as soon as the COVID-19 situation is over, the stocks they are currently buying will spyke to the roofs. But as more and more investors take advantage of the lows currently at NSE, the expected overnight spyke will most likely not happen.

Odipo Riaga
Managing Editor at KachTech Media
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