During the year, the Kenya equities market performed poorly with the NSE All Share Index and NSE 20 shedding 10.6 percent and 21 percent respectively, as a result of declines in large cap stocks, while the NSE 25 lost 2.2 percent since inception during the year.
Pan Africa Asset Management Portfolio Manager Kevin Kiprono attributes the decline to slowdown growth in China and the uncertainty over the timing of the US Federal Reserve rate hike which led to foreign investors exiting the market.
Kiprono says they do not expect a market bull run in the near term as the US Federal Reserve raised interest rates by a quarter percentage point and pledged a gradual pace of increases.
The move will limit action from foreigners who contribute much of the turnover in equity markets.
“Nonetheless, there are stocks that are highly undervalued and present good entry levels thus making the overall equities market a stock-pickers market in 2016,” Kiprono said.
He however cautioned investors to remain neutral in equities with a negative bias.
2015 saw the highest number of listed companies issue profit warnings, with 15 firms notifying investors of expected significant drop in earnings, by at least 25 percent, compared to 11 in 2014.
This points to a challenging operating environment during the year 2015, which was characterised by higher interest rates and a weak shilling.
The top five losers for the year were Atlas Development and Support, Transcentury limited, British American Investments, Longhorn Kenya Limited and Housing Finance Group declining 82.9 percent, 57.7 percent, 55.9 percent, 53.6 percent and 52.4 percent.
Reduced oil exploratory activities led to a low demand for support services, which impacted Atlas earnings, consequently closing out the Kenyan operations to settle in Ethiopia.
The top five gainers for the year were Kakuzi, Williamson Tea, Sasini, Kapchorua and Limuru Tea advancing 76.1 percent, 54.8 percent, 50.4 percent, 46 percent and 40.7 percent.
The gainers, all agricultural stocks benefited from the strengthening dollar, which increased their export value.
The top movers for the year were Equity Bank and Safaricom with a turnover of Sh50.2 billion and Sh39 billion respectively.
“On the bonds front, we still expect a high rate environment to continue as the government funds the deficit gap, upcoming maturities and debt obligations,” Kiprono added.
As the United States continues to gradually increase their rates, more pressure will be exerted to emerging markets to support their currencies as well.
“So overall, for bond investors primary auctions may present good entry points as government and corporate borrow at high yields,” Kiprono advised.
For investors who are risk averse, and do not wish to be subjected to price volatilities like in 2015, Kiprono advises that Money Market Funds (Unit Trusts) still present the best options since some still offer rates as high as 17 percent.