NAIROBI (Xinhua) --
A majority of Kenyan stocks are on a
downward spiral as several companies in various sectors continue
to record depressed earnings while others are haunted by
corporate governance challenges.
transport, energy, agriculture to housing sectors, the stocks
are coming down disheartening a majority of investors, some who
had bought the shares to sell when they rise.
Out of the 64 companies trading at the Nairobi Securities
Exchange (NSE), five are trading below one shilling (0.01 U.S.
dollars) while over 20 others are below 0.10 dollars, an
analysis of the market records show.
Authorities at the NSE have further suspended four companies
from the bourse and delisted one last week due to corporate
Among the worst hit sectors is insurance, which has six
listed firms at the bourse namely Britam, Corporate Insurance
Company (CIC), Jubilee, Kenya Re, Liberty and Sanlam.
The insurance industry’s bottom lines declined in 2018,
weighed down by the increase in net claims and benefits and
depressed investment incomes.
Most insurance companies have invested in government
securities and the real estate.
However, yields on government securities fell to an average
of 7- 9 percent from 9-13 percent in 2018 and there were subdued
returns from a tight real estate market.
"The growth in the insurance industry in Kenya is still
underpinned by underinsurance and low insurance uptake.
"Insurance penetration in Kenya stands at 2.6 percent," notes
investment firm AIB Capital.
On Monday, Britam traded at 0.08 dollars, CIC 0.03 dollars,
Kenya Re 0.10 dollars while Liberty 0.09 dollars, all which are
lower than the prices they started trading at the NSE.
In the energy sector, Kenya Power and KenGen initially seen
as the best blue-chip stocks at the market are currently trading
at lower than the initial public offering price, with the former
trading at 0.04 dollars and the latter 0.06 dollars.
Kenya Airways, in the transport sector, is among the worst
performing stocks as the company continues to chalk up losses.
On Tuesday, the company announced a loss of 750 million
dollars as it trades at 0.04 dollars.
"I bought several shares while still working in a government
parastatal nearly 20 years ago as an accountant and I have not
sold them hoping to cash in but today if I sell them, I would
make huge losses despite the passage of time since prices have
declined," said retiree Boniface Mango on Tuesday.
The stock market used to be a good investment place, now it
is not the best, Mango said.
Investors’ wealth, measured by market capitalization, on
Tuesday stood at 23 billion dollars, down from a high of 29
billion dollars in April last year.
A number of stocks have seen their value decline by up to 90
percent, eroding the market capitalization.
The stock market took its worst beating in the second half of
2018 after most foreign investors exited the market.
The foreign investors account for up to 80 percent of trading
at the bourse, therefore, their withdrawal affects the market as
demand for shares declines, pushing down prices.
The investors, according to analysts, are also sensitive to
poor financial postings and corporate governance issues.
The worst hit when prices of shares fall are the small
investors, who tend to buy to hold hoping to sell later and have
little information about the day-to-day performance of the
It is this kind of investors who are currently disillusioned
by the market, noted Ernest Manuyo, a business lecturer at