Kenya’s stock market recently suffered steep losses, making it the worst performing globally. The weak performance has persisted: the Nairobi Securities Exchange 20-share index stood at about 1420 on 10 November 2023, having fallen from 1509 on 29 September 2023, a drop of 6% over the six-week period. In better days, the index has risen above the psychological 5000 mark: for example, it was 5491 on 23 February 2015.
The stock market matters for the Kenyan public for several reasons. First, up to 70% of the retirement savings of Kenyans may be invested in the stock market. So the market’s weakness might inhibit retirement funds from meeting their pension obligations. Second, many Kenyan companies use the stock market to raise capital and weak market performance discourages them from doing so.
Given these benefits, it is important to understand reasons for stock market value fluctuations. Here, I discuss some possible reasons for the market’s dismal performance and suggest possible ways to reverse the trend.
