Derivatives market double trade in Q1

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The derivatives market had the highest transacted quarterly turnover in the first three months of the year at the Nairobi Securities Exchange (NSE), highlighting the uncertainty that needed more hedging.

The amount was a total of Sh15.5 million, while that of the period to December stood at Sh7.68 million, and that of the first three months after the launch in July was Sh13.06 million.

The number of contracts sealed also rose during the three months when compared to the quarter ending December.

“The derivatives market registered a 47.32 percent increase in trading to 302 contracts traded in Q1 2020 from 205 contracts traded in Q4 2019,” Capital Market Authority (CMA) said in the recent quarterly report.

According to Felix Ochieng, a trader at Faida Investment Bank, the uncertainty brought by the coronavirus pushed the investors to hedge against the growing risks.

“Generally, in Q1, the market became quite volatile on the emergency of covid-19, the previous quarter (4Q19) had been more predictable and positive as investors took informed positions on the market. The derivatives market provided a hedging tool that most investors highly needed when the spot market took a negative turn,” said Mr Ochieng.

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The Author of this Article is a registered Financial & Investment Analyst with Institute of Certified Investment and Financial Analyst. If your require more information Email: info@finsolutions.co.ke or +254 780216631

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