Kenya Rises 7.3% as NSE Leads Laggards in First Quarter

Goddy Egene The Nairobi Stock Exchange closed the first quarter (Q1) of the year as the best performer, leading others on the continent. The exchange appreciated by 7.3 per cent. On the contrary, Nigerian Stock Exchange (NSE) closed as the worst performer, shedding about 10 per cent in the Q1. The Nigerian market had similarly gone down by 16 per cent in 2014. THISDAY checks on Monday showed that three of the six leading exchanges recorded growths, while three also declined. Apart from Kenya that led with 7.3 per cent, the Johannesburg Stock Exchange closed the Q1 with a growth of 5.4 per cent, while Egypt Stock Exchange ended with rise of 2.1 per cent.

On the other hand, Mauritius Stock Exchange went down by 4.3 per cent, while Ghana Stock Exchange shed 1.98 per cent. The Nigerian market was affected the political and economic headwinds caused by the general elections and decline in prices of crude oil at the international markets.

However, analysts at Thaddeus Investment Advisors and Research, have expressed con- cerns about investors’ preference for the Kenyan market despite the fact that Nigeria ranks better in some investment indicators.

For instance, they said Nigeria’s 10-year dollar bond issued in 2013 now yields about 7.5 per cent while Kenya’s yields about 6.2 per cent as at last check.

“What is most interesting here is that Kenya’s debt is trading at a premium while Nigeria’s is trading at a discount! Based on macro analysis looking at Debt/GDP levels (not even close between Kenya and Nigeria) and a lower credit rating for Kenya this should not be so and may very well be called an anomaly by macroeconomic analysts,” they said.

The analysts noted that international investors (based on the numbers) are more confident in the economic progress of Kenya and its ability to service its debt than Nigeria presently.

“While the macro indicators may not be able to defend this confidence, it does once again reflect that in investments, investor perception can become reality as revealed in the current pricing of these bonds,” they said.

The analysts explained that the largest banks in Nigeria are not the best when it comes to return on equity, noting that the