The Kenyan equity market experienced a downward trajectory in July 2024, driven by losses in key large-cap stocks. This trend underscores the volatility in the market and the need for investors to stay informed about the underlying factors influencing stock performance.
According to the Cytonn Monthly – July 2024 report, the NSE 10 declined the most by 1.7%, followed by NSE 25, NSE 20, and NASI, which declined by 1.6%, 1.3%, and 0.8%, respectively. The losses were primarily attributed to declines in large-cap stocks such as Safaricom, Equity, and Standard Chartered Group, which fell by 8.1%, 4.1%, and 3.0%, respectively.
The report highlights that these losses were mitigated by gains in other large-cap stocks, including Bamburi, EABL, and Stanbic, which recorded increases of 48.3%, 7.7%, and 1.5%, respectively. This mixed performance indicates that while some sectors faced challenges, others showed resilience and growth potential.
During the week, the equity market continued its downward trend, with NSE 10 and NSE 25 being the biggest decliners by 1.0% each, while NASI and NSE 20 declined by 0.9% each. Despite this, the year-to-date (YTD) performance showed gains of 18.2%, 16.0%, 12.3%, and 10.0% for NSE 10, NSE 25, NASI, and NSE 20, respectively.
The report also mentions the financial performance of major companies. East African Breweries Plc (EABL) recorded an 11.8% decline in profits after tax (PAT) for the fiscal year ending June 30, 2024. This decline was mainly due to an 18.4% increase in operating costs and an 84.3% rise in net finance costs, despite a 13.5% growth in gross revenues.
Similarly, Kenya Re-Insurance Corporation Limited (Kenya Re) announced a 31.0% decline in profit after tax to Kshs 1.0 billion for the half-year ending June 30, 2024. The decrease was attributed to a 38.1% decline in investment income and a 14.5% increase in total expenses.
These financial performances reflect the broader economic challenges faced by companies, including rising operating costs and fluctuating revenues. Investors need to consider these factors when making investment decisions, as they impact the overall market dynamics.
The report concludes by emphasizing the importance of diversification and a long-term investment strategy in navigating the equity market’s volatility. Investors should stay updated on market trends and leverage opportunities in resilient sectors to optimize their portfolios.
