This archive report was first published on 15 July 2020.
Investors at the Nairobi Securities Exchange (NSE) have been opting for safe assets in the first half of 2020, leading to a decline in bonds turnover.
According to NSE data, the secondary market turnover for bonds decreased to Sh283.8 billion in the six-month period from Sh363.1 billion in the same period last year, representing a 21.8 percent drop.
The decline in secondary bond turnover can be attributed to investors' preference for holding safe assets due to the uncertainty in the market affecting the performance of riskier asset classes, said analysts at Cytonn Investments in a review of the markets for the first half of the year.
As a result, the bonds yield curve rates range from 6.2 percent for the shortest tenor securities (91-day Treasury bill) to 13.1 percent for bonds of over 20-year tenors.
Meanwhile, the equities market recorded a decline of 17 percent or Sh436 billion in market capitalisation to end June at Sh2.1 trillion, with the benchmark NSE 20 share index down 27 percent and the all-inclusive NSE All Share Index falling 17 percent.
Despite the decline in bonds turnover, there was ample demand for new securities floated in the first half of the year, with both Treasury bills and bonds recording oversubscriptions during auctions done by the Central Bank of Kenya.
Investors bid a total of Sh917 billion for Treasury bills in the six months, representing an oversubscription rate of 153 percent, with the CBK taking up Sh551 billion.
