Investment schemes raise stocks holdings by 88%

Collective investment schemes raised their holdings in listed stocks by 88% in the third quarter of 2021, riding on gains in the share prices of blue-chip companies at the Nairobi Securities Exchange (NSE).

The value of quoted equities on the schemes’ books stood at Sh8.66 billion at the end of September, up from Sh4.6 billion in June, data from the Capital Market Authority (CMA) shows.

During the quarter, the blue-chip heavy NSE 20 Share Index rose by 10.8%, with the market capitalisation of the bourse going up by Sh76.4 billion to Sh2.78 trillion.

Investments in fixed deposits climbed above government securities to become the biggest asset class in the quarter, while the schemes cut their exposure to non-listed securities, cash and demand deposits and investments in fellow collective investment schemes.

“In the quarter ended September 2021, investment in fixed deposits accounted for 44% of the total assets under management (AUM) —a 9.66% increase to Sh55.47 billion compared to the Sh50.58 invested in the second quarter,” said the CMA.

“Notably, investments in the securities listed on NSE (excluding those issued by the government of Kenya) recorded an 88.04% increase in the third quarter to Sh8.6 billion.”

The CMA added that the schemes had 41.1% or Sh51.8 billion of their funds in government bonds, up from Sh50.8 billion in June.

The shift to shares followed the improvement in sentiments at the stock market as companies recovered their footing following the hardships encountered during the peak of the Covid-19 pandemic restrictions.

Returns from the market had also been dampened by the decision by many firms to withhold payment of dividends in order to conserve capital in a time of uncertainty over the future prospects of the economy.

However, the economy rebounded to grow by 7.9% in the nine months to September, after contracting by 0.3% in 2020.