Business & Investment

Where top investors made money in 2020

Capital market

Where top investors made money in 2020


NSE trading floor. File Photo | NMG

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Overview

  • Government bonds and Treasury short-term securities provided the best returns to Kenyan investors this year after listed stocks and real estate were hit by the Covid-19 recession.
  • Those who chose to deposit money in their bank accounts also suffered lower returns as lenders reduced their deposits and savings rates to the last lows seen in 2015 and 2016, respectively.
  • Returns from Treasury short-term securities ranged from 6.85% to 9.8%, while bonds offered coupon rates of 9 to 13.4%, beating the real estate, land and equity markets.

Government bonds and government bonds provided the best returns to Kenyan investors this year after listed stocks and real estate were hit by the Covid-19 recession.

Those who chose to deposit money in their bank accounts also suffered lower returns as lenders reduced their deposits and savings rates to the last lows seen in 2015 and 2016, respectively.

The· Business daily According to an analysis of various asset classes this year, the highest revenue available locally came from the provision of loans to the government, which has stepped up its borrowing to make up for the shortfall in tax collection.

Returns from Treasury short-term securities ranged from 6.85% to 9.8%, while bonds offered coupon rates of 9 to 13.4%, beating the real estate, land and equity markets.

bond

Is the largest asset class in the capital markets, Sh 3.85 trillion, and its stable returns make it a safe haven in times of turmoil similar to that caused by the effects of Covid-19.

The stock market, which emerged at the top by offering juicy returns to investors last year, fell as foreign investors withdrew in the midst of global market turmoil over the outbreak of the coronavirus.

The Nairobi Stock Exchange (NSE) reversed the increase in paper assets of 399 billion shillings recorded in 2019, recording a loss of 200 billion shillings in the year to December 30.

Returns from the real estate sector remain resilient in the face of Covid-19 challenges, but lag behind fixed income segment returns this year.

Home sales and rental revenues fell below 5% in third quarter price recovery as more companies reopened after some restrictions imposed to stop the Covid-19 epidemic were relaxed Recorded the profit of.

The relaxation of coronavirus restrictions has allowed companies to stop furloughs and increase the number of payroll workers by improving cash circulation with the reopening of companies and schools.

According to Hass Consult, which runs a quarterly real estate price index in Kenya, rental income increased 4.9% and home prices rose 2.3% in the year to September.

Land prices have fallen further in Nairobi and its surrounding counties of Kiambu, Kaziad and Machakos, despite continued recovery from the suffering of the coronavirus.

HassConsult, which hits the boom, believes Nairobi’s land prices have fallen 2.7% by September, providing bargains to investors with real estate funds, nearly quadrupling in value within 10 years. It hit the boom.

The Nairobi Stock Exchange is heavily influenced by Safaricom and bank stocks, which account for 85.5% of the market valuation.

Safaricom rose 7.94% this year, but banks are in a terrible situation, averaging 20.3% to 50% down for all 11 listed lenders.

“The market was weak last year, but with the introduction of Covid-19, things got worse. Given the poor performance of most companies, the weakness is expected to continue next year.” Said. Genghis Capital analyst Gerald Muriuki.

“Like Safaricom, there may be outliers that are expected to have solid fundamentals and recover faster than many other stocks.”

Only 10 of the 62 NSE-listed companies have recorded positive returns this year, and Safaricom is the only top-cap stock on the list of winners with small caps predominant.

Fund administrator Zammara CEO Sandeep Laitula said in terms of returns from financial markets, equities are showing a gradual recovery and government bond rates are expected to rise further, so mixed bags He said he was watching.

“If you can control Covid, you can expect a gradual recovery in equities. Otherwise, the market is expected to stabilize. For bonds, the Treasury is putting a lot of pressure on budget funding, which is It could be the cause. The rate of increase. “

“Given the need to get an investment in the country, another area of ​​growth is private equity.”

For the past few years, real estate has been one of the fastest growing sectors in the country, with real estate revenues surpassing equities and government bonds.

However, since 2016, the sector has recently slowed growth in sales and rental prices due to the huge inventory of unsold units amid credit access constraints that are negatively impacting demand.

The downturn in the real estate market was exacerbated by the Covid-19 pandemic causing unemployment in many sectors and increased housing foreclosures related to loan defaults.

Rent decline

“Overall rents rose 2.5% in the third quarter and 4.9% annually, as tenants are negotiating discounts in a difficult economic environment in some suburbs,” said Hassconsult’s development manager. Rents continue to decline. ” Sakina Hasanari consulting and research at the time of the report release last month.

For those who deposit money in their bank accounts, CBK data shows that the average savings interest rate in October was 3.49%, the lowest since July 2016.

Interest paid on large deposits (usually from cash-rich companies that can afford higher interest rates) averaged 6.37% in October, the lowest since July 2015.

Most banks set a threshold to receive deposits for free, so most savings accounts do not earn interest.

Banks have reduced interest rates on deposits and savings, as they are awaiting approval from CBK and may not be able to raise interest rates. On average, lending rates fell from 12.43 percent in the previous year to 11.92 percent in October.

Where top investors made money in 2020

https://www.businessdailyafrica.com/bd/markets/capital-markets/where-top-investors-made-money-in-2020-3243658 Where top investors made money in 2020

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