How Kenya’s NSE index surged by 74% a decade on

The Nairobi Securities Exchange (NSE) benchmark index has experienced a remarkable surge of 74 per cent over the past decade, positioning it as the top-performing stock exchange market in Sub-Sahara Africa (SSA) during that period. This outstanding growth has been fueled by various factors, with major contributions coming from the financial services sector. Rodney Omukhulu, Assistant Investment Analyst at Cytonn, shed light on the market's performance and what lies ahead in an exclusive interview with CNBC Africa. Reflecting on the past 10 years at the NSE, Omukhulu pointed out a significant growth in large-cap stocks, particularly in financial services companies such as banks and insurance companies. These entities have played a crucial role in driving the market's performance and contributing to the impressive gains witnessed in the last decade. Omukhulu also highlighted the NERBA Securities Exchange's membership in the African Securities Exchange Association, emphasizing the importance of such partnerships in creating synergies among listed companies across different markets. By collaborating with other exchanges, the NSE can enhance its offerings and provide clients with more opportunities for investment. In terms of recent trading activity, 2020 saw a notable uptick in trading volume, with some of the biggest gains observed in banking stocks. This uptrend was partly attributed to the removal of the interest rate cap in late 2019, which led to a more favorable interest rate environment for banks. As a result, investors showed increased appetite for equities, with banking shares driving significant gains in the market. Looking ahead, Omukhulu expressed optimism for the market's performance, foreseeing continued growth fueled by the removal of the interest rate cap and a shift towards equities by investors. With more players expected to transition from fixed-income securities to the equity market, Kenya's capital market is poised for further expansion and increased activity. When questioned about the challenges faced by the NSE in the past year and the strategies to address them, Omukhulu emphasized the importance of technological advancements and regulatory reforms in shaping the market's future. By leveraging new technologies and regulatory initiatives aimed at encouraging private companies to list, the NSE aims to enhance its competitiveness and offer a more robust marketplace for investors. In conclusion, the past decade has been a period of significant growth and transformation for the Nairobi Securities Exchange, with the index's impressive 74% surge underscoring Kenya's position as a leading player in the African stock market. With a positive outlook for the future and a focus on innovation and regulation, the NSE is poised to sustain its momentum and attract growing interest from local and international investors.