Investors in shares listed on the Nairobi Securities Exchange (NSE) made the best returns in 2024 ahead of those who put their money in bonds, fixed bank deposits and property, marking a turnaround in fortunes after the bourse trailed other investments in 2023.The NSE recorded a 34.4 percent or Sh495 billion jump in investor wealth to Sh1.934 trillion between January 1 and December 30, which was nearly double the best return of 18.5 percent from Treasury bond auctions and the average yields on Treasury bills of between 9.89 percent and 16.99 percent. Keeping cash in a fixed deposit account earned investors an average of 10.86 percent while those holding dollars saw their value eroded by 17.4 percent after the shilling gained against the greenback. Property investors had a return of 8.7 percent on house sale prices, 2.2 percent on rental income and 8.2 percent for land holdings. The turnaround at the NSE was the product of double-digit share price gains among top-tier banks, which are set to deliver record profits and handsome dividends. All 10 listed banks have recorded share price gains of more than 20 percent since the beginning of the year, led by I&M Group at 82 percent, KCB Group at 80.6 percent and Standard Chartered Bank Kenya at 70.2 percent.Blue-chip firms such as Safaricom and East Africa Breweries Limited (EABL) also propped up the market with gains of 28 percent and 50 percent, respectively. As a result, the NSE 20 Share Index was up by 32.8 percent to 1,993.74 points, and the NSE All Share Index by 33.7 percent to 123.12 points. "The market was coming off two years of very low growth, so there was a low base effect in play that meant any gains would likely see equities outshine the performance of other asset classes," said Wesley Manambo, an analyst at Standard Investment Bank. "There were also some outlier events such as the Bamburi takeover, KCB selling National Bank and AfricInvest acquiring a stake in I&M Group, which helped boost share prices of the companies involved." Equities have been tipped to continue as the top returning asset class in the new year, benefitting from increased inflows as investors move away from bonds where interest rates have fallen sharply. Ongoing rate cuts in the US, the EU and the UK look set to trigger capital flows to emerging and frontier markets like Kenya, boosting valuations of companies with exposure to foreign investors."In coming quarters, expect increased inflows into equities as we enter a period of lower interest rates, with dividend yields also likely to compete favourably versus fixed income returns," said Ronnie Chokaa, a senior research analyst at Capital A Investment Bank. The NSE is expected to continue benefiting from reduced foreign investor sell-offs compared to the last four years. In the year-to-date, foreigners have made net sales of about Sh2.06 billion—excluding the Sh13.8 billion worth of Bamburi Cement shares sold to Tanzanian firm Amsons Group by Swiss firm Holcim in a buyout deal. In 2023, foreigners sold a net of Sh19.1 billion worth of shares from the NSE, weighing down blue-chip stocks and contributing to the market, shedding 29 percent or Sh574 billion in investor wealth. A stronger shilling has helped stem the foreign investor exits, by improving the dollar-denominated returns on stocks. The local currency's gains, while helping equities investors, have, however, hit those who held hard global currencies such as the dollar euro and British pound as an investment.Since the beginning of the year, the dollar has depreciated against the shilling by 17.4 percent, the pound by 19.2 percent and the euro by 22.9 percent. This means that a purchase of $100,000 in January at an opening price of Sh156.46 per dollar received a loss of Sh2.72 million on the greenback if held to date. Investors keeping cash in fixed deposit accounts enjoyed an average return of 10.86 percent in the 11 months to November, up from 8.13 percent in the same period last year.  (ICE NAIROBI)

Fonte notizia: Business Daily