The Nairobi Stock Exchange (NSE) was recently labelled the worst-performing exchange globally by Bloomberg in comparison to select exchanges that the company tracks. This designation is weighty, but before we delve into the reasons for this classification, let us define the metric used to make this conclusion. What precisely is being measured, how is it measured, and why is it important?
The classification came on the backdrop of the NSE all-share index price recording the longest quarterly index losses of 27.9% since 2017 during the post-election violence clashes. Share prices reflect market participants' perceptions of the value and growth prospects of the listed companies. As share prices fluctuate, they indicate the exchange's challenges and opportunities.
It is important to note that price fluctuations of indices are normal as they are influenced by several factors, including capital flow, trading volumes, foreign capital restrictions, company performance and growth in the number of