Businesses & Financial News

Stock markets buoyant amid looming Covid-19 fourth wave

By Steve Umidha

Unexpected optimism crept into the Kenyan stock markets in the month of June a sharp jump in market capitalization which rose by 2.1 per cent from Sh 2,646.71 Billion in May to Sh 2,702.22 Billion in June 2021.

The growth witnessed comes amid looming Coronavirus fourth wave whose impact is feared could draw back gains made in the Kenyan stocks market industry.

Further, figures by June monthly barometer by the Nairobi Securities Exchange (NSE) shows that Equity turnover decreased by 1.5 per cent in June 2021 from Sh14.2 Billion to Sh13.95 Billion, while bonds turnover lessened by 9.6 per cent from Sh.106.9 Billion to Sh.96.6 Billion.

The country’s inflation rate however increased to 6.32 per cent in the month under review from 5.87 percent recorded in May 2021, which was blamed on increasing food prices.

Kenya’s private sector during the month under review also recorded a marginal growth according to estimates by Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey for June – which showed a rise in output and new orders for the second month on the bounce.

As a result of a somewhat steady economy, economic experts have forecast an improved foreign investment inflows by multinationals not only in Kenya but also across the region despite the economic setbacks caused by the Covid-19 pandemic.

The month also saw the National Treasury revise the country’s GDP growth forecast for 2021 to 6.6 per cent from 6.4 percent, owing to lower base in 2020, stable macroeconomic environment, implementation of the Big Four Agenda and Economic Recovery Strategy and expected favorable weather conditions that are expected to boost agriculture, and subsequently exports.

That improvement began in May when Kenya’s private sector recorded a solid and fastest growth in seven months amid loosened travel restrictions at the time.

Owing to relaxation of measures on curfews and travel between counties, firms reported an increase in client orders.

Lifting of public health restrictions at the beginning of May resulted in a significant improvement in business activity in May. Fewer restrictions resulted in higher demand as indicated by the rise in new orders.

Firms appeared to be increasingly optimistic about the next 12 months as new COVID-19 case numbers continue to fall and vaccinations continue to rise. The future outlook for firms improved for the first time in 4 months

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