Pension schemes have gradually but steadily been cutting stake in government debt since July coinciding with recent rally at the Nairobi bourse ahead of the August 8 poll.
The Central Bank of Kenya (CBK) numbers show the schemes have reduced holding of government domestic debt by Sh21.22 billion from mid-July through August 25 to Sh575.70 billion, or 27.1 per cent of the Sh2.12 trillion domestic debt.
The Nairobi Securities Exchange looks to have rebound from a two-year bear run despite a prolonged electioneering period, which usually raises uncertainty among investors, delaying long-term investment decisions.
Investors have mostly preferred bonds to avoid loss in a volatile market.
The benchmark NSE 20 Share index, which tracks the performance of 20 blue chips on the stock market, gained 29.38 per cent since April through August 31, meaning investors on average enjoyed similar capital gains.
Institutional investors bought heavily into the equities from July, overtaking foreigners who had cumulatively controlled about 65 per cent of trade in the year through June, said Genghis Capital senior research analyst Churchill Ogutu.
“It was mirrored across fund managers and also some pension trusts may have come in to get into the buying opportunities,” Ogutu said on phone.
A poll by Actuarial Services East Africa on 364 schemes, with Sh602.2 billion under their watch, showed the recovery in the stock market in the second quarter — from a 2.3 per cent loss in the first quarter to a 15.9 per cent gain — lifted average pension returns to 8.1 per cent from 2.1 per cent in the first quarter. Net returns were, however, still negative as average inflation was 10.8 per cent in the period.
Zamara, formerly Alexander Forbes Financial Services East Africa, said rise in schemes’ equity holding to 21.5 per cent in June from 19.1 per cent in March was largely driven by “increased prices” on stock market.
“We have had two bad years and a shaky first quarter (2017) coming off the back of three good years (2012-14), and things have started recovering and… (they were) continuing until we had the announcement (of fresh presidential election) until last Friday. I am hoping this will be a temporary blip,” Zamara chief executive Sundeep Raichura said on phone.
“I am not seeing schemes actively going into equities because most schemes are still adopting wait-and-see attitude.”