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Tuesday, March 31, 2020

Investors on NSE lose Sh. 573 billion as economy plunges

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NSE Trading: Things have been very tough on the Nairobi Securities Exchange. Over past two months alone, investors have lost a whooping half a trillion shillings.

Things have gotten worse in the wake of the coronavirus pandemic and plunges in the oil sector. The fall in share prices has mainly been driven by foreign investors who are exiting en masse.

According to a report that appeared in the Business Daily, the value of all the stocks on the Nairobi bourse stood at Sh. 2 trillion on Friday compared to Sh. 2.6 trillion on January 10. On Friday alone, investors lost Sh. 120 billion.

“Safaricom, KCB Group, Equity Group and East African Breweries (EABL) accounted for about 72 percent of the paper wealth erosion over the period. Safaricom closed with a market value of Sh. 975.5 billion, the first time it has slipped below the Sh. 1 trillion mark since February last year. Over the two-month period, Safaricom has shed Sh. 338.5 billion. It was followed by Equity, whose market value dropped by Sh. 48.4 billion, KCB (Sh. 39.6 billion) and EABL (Sh. 15.8 billion),” the report said.

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The report also noted that over the past few weeks,foreign investors, who make up about 70 percent of daily trading at the NSE, have been the net sellers.

The losses on the NSE were replicated globally with markets in the US crashing to their worst levels since the infamous Black Monday crash. Dow Jones Industrial Average’s worst day – in terms of value lost – since the Black Monday crash of 1987.

The plunge extended a sell-off that has wiped out most of Wall Street’s gains since President Donald Trump’s election. The heavy losses came amid a cascade of cancellations and shutdowns across the globe – including Trump’s suspension of most travel to the US from Europe – and rising worries that the White House and other authorities around the world cannot counter the economic damage from the coronavirus pandemic any time soon.

“The news just continues to get worse, and the travel ban puts an exclamation point on the weakness we’re going to see in global GDP and, in turn, the US,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.

“We’re starting to get a sense of how dire the impact on the economy is going to be. Each day the news doesn’t get better, it gets worse. It now has hit Main Street to a more significant degree.”

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Stocks fell so fast on Wall Street at the opening bell that they triggered an automatic, 15-minute trading halt for the second time this week.

The so-called circuit breakers were first adopted after the 1987 crash, and until this week had not been tripped since 1997.

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