Kenya succeeds Nigeria as the world’s worst performing stock exchange

The Nigerian Stock Exchange was reported as the worst performing bourse for 2016, but so far 2017 , Kenya’s Nairobi Securities Exchange is the world’s worst performer.

Kenyan stock prices are at more than three-year lows, with Geoffrey Odundo, CEO of the exchange, projecting that they may have further to fall with domestic investors favoring bonds and foreign buyers waiting for lower valuations.

Shares on the Nairobi Securities Exchange have dropped 6.9 percent since January 1, 2016, according to Bloomberg data.

This is as a result of jitters among investors about the country’s elections scheduled for August 2017.

“Because of issues around volatility in the markets, most pension schemes over the past two years have lost value in their equity holdings so they want to play a bit safer,” Odundo said in an interview quoted by Bloomberg.

“Interest rates have historically given them a better performance so that is why they are willing to buy government paper.”

Kenya’s stock exchange is not only the world’s worst performer so far in 2017, but its valuations are also at the weakest point since 2009.

Odundo expects the stocks to bottom out at some point, with plans to bring new products on board.

“We see it bottoming at some point. Foreigners are waiting for better prices and are picking stocks at fairly low prices and this has dragged the index downwards, especially given that when the stocks that really drive volume — which are the telcos and the banking sector — fall, they drag the index down,” Odundo said.

“‘We are going to get derivatives; we are looking at new products around exchange-traded funds, global depository receipts.

“A lot of focus around new product will create new feel around the stock market and make our markets more attractive to international investors given the kind of products we are bringing on board.”