Kenyan markets still volatile despite increased securities activity

Kenyan financial markets have recently experienced sharp swings, with equity turnover jumping 336.85 per cent to KES 719.26 million on one day and dropping by 86.08 per cent to KES 100.11 million on another. Bond turnover also saw significant fluctuations, peaking at KES 10.57 billion before falling to KES 6.36 billion. To analyze these trends, George Munga Amolo, Managing Partner at AMG Consulting Group, joined CNBC Africa for an insightful discussion. The key factors contributing to the fluctuations in equity market turnover, as highlighted by George Munga, are the upcoming declarations of dividends by companies, especially in the banking and manufacturing sectors. Investors are closely monitoring these dividends as we approach the end of the third quarter. Additionally, the return of Foreign Direct Investments (FDIs) to Kenya after a period of economic stabilization is also impacting market indices. This influx of FDIs is leading to fluctuations in the NSE indices. The bond markets, on the other hand, are experiencing volatility due to the government's efforts to issue various bonds, including infrastructure bonds. While some bonds initially faced challenges due to investor confidence issues, the rebuilding of confidence has led to increased uptake, particularly by foreign investors. The competitive rates offered by infrastructure bonds, reaching as high as 18%, are attracting investors, especially banks and money market players. These factors are driving the fluctuations in bond market turnover. Looking ahead, George Munga anticipates a continued increase in local investor appetite for government securities, given the improved political climate. Local investors are gaining confidence in government bonds, which were previously overlooked due to political uncertainties. Moreover, the challenging environment for small and micro-enterprises in Kenya is diverting funds towards government securities, leading to increased liquidity in that space. Foreign investors are also showing renewed interest in the Nareb Stock Exchange, signaling a positive outlook for both equities and bond markets in the coming weeks. Overall, the Kenyan financial markets are navigating through a period of volatility, driven by a mix of domestic and international factors.