Investors make fortunes at NSE compared to other investments in 2024

Investors who chose the Nairobi Securities Exchange (NSE) as their investment platform of choice in the year ending December 2024 had much to smile about compared to their counterparts who prioritised other avenues.

This is as they got remarkable returns, arguably making them the most profitable investors in the year under review.

Official data shows between January 1 and December 30, the NSE saw a staggering 34.4 per cent increase in investor wealth, translating to an additional Sh495 billion. This brought the total investor wealth to Sh1.934 trillion.

Notably, the performance is nearly double the best return of 18.5 per cent recorded in Treasury bond auctions, as well as the average yields on Treasury bills, which ranged between 9.89 per cent and 16.99 per cent, respectively.

On the other hand, property investment lagged, with data showing its investors earned just 8.7 per cent on house sale prices. This is as the rental income offered a modest 2.2 per cent return.

Similarly, land holdings provided a return of 8.2 per cent, showing that the property market didn't keep pace with the stock market's performance in the year under review.

For investors holding cash in US dollars, the year was less favourable to them, on the back of the positive performance of the local currency during the year.

The Kenyan shilling recorded its first year-on-year gain in four years in the year under review.

The latest analysis shows the local currency weakened in the past three years: 2023, 2022 and 2021 by 26.8 per cent, 9.0 per cent and 3.6 per cent, respectively.

This negative trajectory culminated in early 2024, when the shilling was at its weakest, standing at an all-time low of 161 to the dollar.

However, as of February 2024, the shilling began to show signs of recovery with the currency strengthening by 17.4 percent year-to-date.

The shift comes after a prolonged period of decline that began in early 2020 when the local currency started weakening against the global benchmark.

Despite global uncertainties, the NSE's outperformance in 2024 underscored the exchange as a standout platform for wealth growth, providing substantial returns far exceeding those of traditional investment options.

The strong performance at the bourse is largely attributed to the significant double-digit share price increases among leading banks, which are expected to report record profits and dividends at the end of their financial years.

All 10 listed banks have seen share price increases exceeding 20 per cent since the start of the year.

Additionally, blue-chip companies like Safaricom and East African Breweries Limited (EABL) have contributed to the market's growth, with gains of 28 per cent and 50 per cent, respectively.

The record appears to mark a reversal of the investor sell-offs that have affected the bourse over the past nearly four years.

Year-to-date, foreign investors have made net sales totalling approximately Sh2.06 billion.

Nevertheless, in 2023, foreign investors sold a net amount of Sh19.1 billion worth of shares on the NSE.