The Kenyan and Tanzanian stockmarkets started the year on a low, as the bear market run continued, with investors losing a just over $1 billion in January.

The Nairobi Securities Exchange All Share Index dropped by 6.6 per cent in January to close at 136.81 points, with the benchmark NSE 20 Share Index also dropping by 6.1 per cent to close at 3,773.17 points.

At the start of the year, the market capitalisation stood at $19.5 billion, closing the month at $18.5 billion. Despite the drop in market capitalisation, stocks on telecommunications and banking counters rallied to register some gains in first month of the year.

At the Dar es Salaam Stock Exchange (DSE), the All Share Index dropped by 1.8 per cent in January to close at 2291.12 points with the benchmark Tanzania Share Index (TSE) also dropping by 4.8 per cent to close at 4263.44 points.

The market capitalisation at the end of January stood at $902.2 million compared with $919.9 million at the start of the year. Year-on-year, on all the counters except for the commercial and allied sectors recorded a drop with the banking, finance and investments falling a 45 per cent. At the start of the year, the market capitalisation stood at $19.5 billion, closing the month at $18.5 billion.

Daniel Kuyoh, a senior investment analyst at Alpha Africa Asset Managers, said that towards the end of last quarter, a number of companies issued profit warnings and some investors exited these firms and moved into cash holdings.

“We are also seeing a lot of preference for fixed income instruments, such as fixed deposits and Treasury bills. The low risk tolerance of investors have has seen them move towards capital protection rather than growth,” Mr Kuyoh said.

Eric Munywoki, head of research and business development at Sterling Capital Ltd, said that for the better part of last year, there were significant foreign outflows, but this started reversing over the last quarter.

“We still expect to see further downward pressure in the equities market due to the current economic climate. Most investors have taken flight to short term fixed instruments to ride out of volatility,” Mr Munywoki said.

Eveready, despite posting a $78,000 loss in the year ended September 2015, emerged as the top gainer, with its share price rising 13 per cent. In October last year, the firm embarked on a diversification drive that saw it sign a distribution deal with Chloride Egypt as its automobile batteries supplies.

It also contracted Pakistan’s Sayyed Engineers Ltd to supply pens and rubbers, with Supreme Imports supplying the Eveready lighting products.

Longhorn Kenya, buoyed by $71,000 profit as at September last year, has seen a 10 per cent rise in its share price, with Sasini and East Africa Portland Cement recording 7 per cent and 4 per cent rises respectively.

Among the top losers of the month was Uchumi at 31.1 per cent, largely because of the financial woes it is facing. The firm is also experimenting with a new retail chain model that it says will boost its competitiveness and see it return to profitability.

Home Afrika lost 26.9 per cent against the backdrop of a year losses that saw its chief executive officer Njoroge Ng’ang’a sacked. The firm’s performance has seen its share price decline to Ksh1.90, representing a 94.1 per cent drop from the peak of Ksh25 in its first day of trading in July 2013.

Elizabeth Wangechi, an equity analyst at Genghis Capital, said that Home Afrika, as various projects have not yielded returns yet, explaining the low investor confidence in it.

ARM Cement’s constant announcement that it will need capital for expansion has also seen its stock dip by 19.8 per cent. The investors seem to be reacting to the shifting of goal posts in terms of refinancing their books. Last year, there was talk from the management about issuing a bond, then a rights issue, all now cancelled in favour of a strategic investor. The refurbishment of its Tanga and Nairobi plants also impacted on the firm’s bottom line.

The NSE also saw an inflow of $3.64 million, which is a great year to date improvement, as compared with an outflow or $2.86 million in January last year. The East Africa Breweries Ltd, Bamburi and British American Tobacco counters saw the highest percentage of foreign investor participation.

“Most foreign inflows come into the large counters because this is where their interests are. Considering that we are still in a bear run, most companies are still at a low, with some of them trading below the sector average so they still have a chance of performing well,” Ms Wangechi said.