Nairobi SE stock market value dips by 6.9 %

The Nairobi Securities Exchange (NSE) has seen a significant decrease in stock market value, with a 6.9% dip since the beginning of the year. Local investors are opting for government treasuries with higher yields, while foreign counterparts are cautious and waiting for better valuations. Mercyline Gatebi, Senior Research Analyst at Kingdom Securities, joined CNBC Africa to discuss the market trends. Gatebi highlighted the challenges facing the market, including the depreciation of the Kenyan shilling and the lackluster performance of the NSE. The Kenyan shilling touching 104 against the dollar presents a precarious situation for the economy as it increases the cost of imports and puts pressure on foreign reserves. Gatebi emphasized the need for the Central Bank to intervene in the market to stabilize the currency. Despite the challenges, Gatebi mentioned that Kenya's currency is not faring as badly as some other regional currencies. When it comes to the performance of the NSE, Gatebi expressed concerns about the market's downward trend, with the NSE 20 index struggling to stay above 3,000 points. The upcoming election year and other factors such as drought and inflation are causing uncertainty among investors. Gatebi noted that the banking sector, which has traditionally supported the market, is also expected to face challenges in the current economic climate. However, Gatebi remained optimistic about Safaricom's performance, citing the company's profitability and market dominance. She anticipates positive results from Safaricom in the first quarter, which could bolster the stock market. In the automotive sector, Gatebi discussed the decline in car sales, attributing it to the slow growth of Kenya's middle-income population and limited access to credit. The introduction of new tax regulations has further dampened the car market, leading to a drop in car imports. Gatebi also commented on the entry of Volkswagen (VW) into the Kenyan market, targeting the middle-income segment. However, she emphasized that the challenging economic environment may pose obstacles for car dealers and the overall economy. Overall, Gatebi's analysis painted a picture of a struggling stock market and economic landscape in Nairobi, with various sectors facing challenges and uncertainties.