The Nairobi Securities Exchange (NSE) recouped some of its losses on Friday after large bank stocks rallied on the day to push investor wealth back to the Sh4 trillion level.
Market capitalisation -the measure of investor wealth- rose Sh56.24 billion on Friday to close the week at Sh4.004 trillion.
Coming into the session, the bourse was on a losing run that had seen its valuation drop by Sh337 billion since hitting its all-time peak of Sh4.285 trillion on September 3.
The slide however opened an opportunity for investors to buy at a discount some of the blue-chip stocks that have recently touched all-time highs. Co-operative Bank of Kenya was the top gainer among the five large listed companies, adding 8.9 percent to Sh34.80 per share, which translated to a Sh16.7 billion jump in valuation to Sh204.7 billion.
Equity Group followed with a market cap gain of Sh9.43 billion to Sh371.7 billion, after its share added 2.6 percent to Sh98.50 on Friday.
KCB Group’s valuation rose Sh8.8 billion to Sh279.6 billion as its share price closed the day 3.3 percent higher at Sh87 per unit.
Safaricom added Sh4 billion to its valuation to Sh1.41 trillion, as its share price only rose by 0.3 percent to Sh35.30 at the close of the week.
These large stocks had accounted for the bulk of the losses seen over the previous week-and-a-half.
Equity, KCB and Co-op Bank traded at all-time highs of Sh106, Sh98.55 and Sh38.55 per share respectively as of September 3, while Safaricom was trading at a multi-year high of Sh37.94 per share.
The stocks had rallied throughout August, ultimately triggering a selloff by investors who were looking to actualise the capital gains they had accumulated in the period.
When sellers outnumber buyers in a session, prices tend to trend downwards as those offloading units quote their stocks at the lower end of the daily price limit in the hope of securing takers for their shares ahead of competing sellers.
Alternatively, when there is higher demand than supply, sellers are able to quote and get paid prices that are near the upper daily limit, setting off a rally.
For foreign investors, rising global risks also contributed to selling activity from the second week of September.
Attacks by Yemeni Houthi rebels on the Red Sea shipping channel caused a jump in benchmark oil prices, triggering fears of a new round of higher global inflation.
Due to the rising geopolitical tension, the yield on US 10-year bonds hit the key five percent threshold for the first time since 2023.
The US Federal Reserve also raised its benchmark rate by 0.25 percentage points last week, signalling concerns of higher inflation in the world’s largest economy.
The benchmark US 10-year bond rate and the Fed rate are a closely watched gauge of market inflation expectations, influencing capital movement across the globe.