The Nairobi Securities Exchange (NSE) yesterday suffered its biggest single-day loss in over a year, as US President Donald Trump’s sweeping tariffs continued to batter global markets.
Blue chip stocks Safaricom, Equity Group and KCB Group accounted for the bulk of the day’s Sh37.42 billion losses, with a combined decline of Sh33.7 billion in valuation, paying the price for their high exposure to foreign and institutional investors who led the selling at the market.
Mr Trump Thursday imposed tariffs of between 10 percent and 50 percent on America’s trading partners, setting off fears of a global trade war and recession among the world’s big economies.
Stock markets in the US and the UK experienced their worst one-day falls since the beginning of the Covid pandemic in 2020.
At the Nairobi bourse, 31 out of the 57 actively traded counters shed value yesterday, with analysts saying that the market was catching the global selloff contagion as investors waited to see the retaliatory measures, if any, that major economies would unleash against the US.
The all-inclusive NSE All Share Index shed
1.8 percent or 2.4 points to end the day at 129.13 points, while the blue chip NSE 20 Share Index was down by one percent or 20.3 points to 2204.76 points.
“Given the circumstances around the tariffs, it was expected that there would be a flight out of equities, which is likely to continue until we have stability or clarity on the tariff issue,” said Melodie Ndanu, a research analyst at Standard Investment Bank.
“Institutional investors, especially fund managers, are also responding to volatility triggers that are necessitating exits from frontier markets.”
Participation in trading at the NSE was evenly split between foreign and local investors, with the foreigners making net sales of Sh14.7 million, compared to net purchases of Sh67 million on Friday.
Total traded turnover for the market stood at Sh177 million, down from Sh397.2 million on Friday.
Of the 14 NSE counters that are part of the globally watched Morgan Stanley Capital International (MSCI) emerging and frontier market indices, 10 shed value yesterday, reflecting the bearish sentiment of foreigners on the NSE.
Safaricom, Equity Group, EABL, KCB Group, Co-operative Bank and Standard Chartered Bank Kenya are listed on the MSCI frontier markets index, while BAT Kenya, KenGen, Kenya Re, Kenya Power, DTB Group, Carbacid, Bamburi Cement and HF Group are on the MSCI frontier markets small cap index.
Of these companies, only Stanchart and Kenya Re saw a higher share price yesterday, making thin gains of 0.4 and 0.6 percent to Sh301.50 and Sh1.67 per share respectively.
Co-operative Bank was unchanged at Sh16.50, while Bamburi remains suspended from trading pending a buyout of minority investors.
Outside of Kenya, Asian markets took the biggest hit from the tariff-led sell-offs, as they adjusted to steep tariffs of between 24 and 49 percent on countries such as Japan, China, India, Bangladesh and Vietnam, which spells trouble for their trade earnings.
In Hong Kong, the Hang Seng Index fell by 13 percent, its biggest one-day decline since 1997, while Tokyo’s Nikkei Index dropped by 7.8 percent, to settle at a one-and-a-half-year low of 31,136.58 points.
In Europe, Germany’s DAX index and the UK’s FTSE 100 shed 5.8 percent and 4.9 percent, respectively, in morning trading. US Futures on the S&P 500 and Nasdaq indices shed 3.4 percent and 5.3 percent ahead of the markets opening later in the day.
Meanwhile, Brent Crude oil traded 2.5 percent lower at $63.97 (Sh8,269) per barrel yesterday, building on losses of seven percent seen last week after the tariffs were announced.
Some of the capital leaving the equities market is expected to find its way into the bonds market, where there is more certainty about returns and safety in terms of risk from losses.
Prolonged jitters will also likely see an acceleration of foreign exits from frontier and emerging markets to larger economies, where there are better hedges against losses and uncertainty.
Similar shocks in the past have led to the NSE bleeding foreign capital, but the bleeding stock markets in major economies might limit the magnitude of potential exits.
Kenya has also fared relatively better in the Trump tariff blitz compared to some of its peer economies on the continent and in Asia. For listed banks, this will prevent a further deterioration of their loan books.
Kenya was placed in the baseline tariff band of 10 percent, similar to its neighbours Uganda, Tanzania, and Ethiopia.
The impact of the trade charge will therefore be less pronounced compared to the continent’s worst hit economies, which include Lesotho (50 percent), Madagascar (47 percent), Mauritius (40 percent), Botswana (37 percent) and South Africa (30 percent).
Kenya might also benefit indirectly through reduced competition for access to the US market for apparel and agricultural produce shipments, due to the higher tariffs that have been imposed on rival exporters such as Vietnam, Sri Lanka, Bangladesh, China, Pakistan, India and China.
