The government security, whose yields stood at 23 percent, lifted the segment that has been performing poorly for many months to a new high this week, indicating better times for investors.
Trading of bonds at the bourse had hit the nadir, with turnover dropping to a low of 6 million dollars a week in July, according to data from the NSE.
However, the worst seems to be over for the segment, as trading this week rose to 131 million U.S. dollars from 45 million dollars the previous week.
“The bond market activity rose significantly by 193.3 percent in the week under review. The number of deals rose to 82 compared to 78 traded the previous week,” said the Central Bank of Kenya in its review of the market Saturday.
The bank attributed the vibrancy to the secondary sell of a two-year fixed income bond that was first floated at the debt market on October 21.
“The increase in activity during the week was due to the secondary trading of the FXD2/2015/1 Budgetary Support Bond, which commenced on October 27,” said the CBK.
At the debt market, the government sought to raise 198 million dollars. The bond was hugely oversubscribed with investors bringing in 312 million dollars as they sought to cash in on the 23 percent interest rate.
In the week ending October 24, bond trading had gone down to 45 million dollars from 65 million dollars.
The number of deals declined to 70, compared to 130 traded the previous week. CBK attributed the low activity to traders avoiding to sell their bonds at low prices due to prevailing high market interest rates.
Similarly, at the equities’ segment, trading improved with equity turnover and market capitalization, which measures shareholders wealth, surging.
“Equity turnover rose by about 130 percent on account of increase in shares traded. Shareholders’ wealth, measured by market capitalization, increased by about 5 percent to 19.1 billion dollars from 18.4 billion dollars the previous week,” said the CBK.
The Nairobi All Share Index (NASI) and the NSE 20 Share Index declined by 1 percent and 1.31 percent, respectively this week.
The NSE 20 share index closed the week at 3,868.83, while the NASI 137.28.
FTSE NSE Kenya 15 Index and FTSE NSE Kenya 25 Index, which measure stock performance of 15 largest companies by market capitalization and 25 most liquid stocks at the NSE respectively, dropped to 179.96 and 179.43.
With the increase in bond trading, the FTSE Government Bond Index declined marginally by 0.21 percent in the week reflecting a rise in the secondary market yields.
As in the last week, the banking sector was the most active contributing to over 67 percent of total shares traded. This was followed by the Telecommunication and Technology and Energy and Petroleum sectors at 16 percent and 7 percent of the total shares traded, respectively. The agricultural sector was the least active. Enditem