Stocks of Kenya’s bourse Nairobi Securities Exchange (NSE) firms valued below Ksh4 billion ($26.7 million) dominate the list of counters that have created paper money for investors this year, defying the prevailing plunge in the equities.

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Fifteen of the 24 firms that have gained in value since the start of the year include Kapchorua, Kenya Orchards, Eveready, HF Group and Flame Tree in a market where top five large stocks — Safaricom, Equity, Co-operative Bank, KCB, and East African Breweries— have shed value since January. 

Only Umeme, BK Group and CIC with market valuations above Ksh4 billion are in the list of the 15 stocks whose prices have gained by more than 10 percent since January, showing small stocks have built paper wealth for investors than larger ones.

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Analysts say large stocks have been impacted by their large exposure to foreign investors in an environment where the shilling has shed more than a fifth (21.2 percent) of its value against the dollar since January and interest rates have been rising in developed markets.

The NSE has shed Ksh499.3 billion ($3.3 billion) year-to-date, with Safaricom losing Ksh366.6 billion ($2.45 billion) as the share dropped by about 40 percent. Other large-cap stocks in the top five league—Equity, Co-operative Bank of Kenya, KCB, and East African Breweries—have lost a combined Ksh129.23 billion ($862.7 million).

KCB Investment Bank says real returns for investors, adjusted for currency depreciation and inflation, have been hard to come by in the current environment, leaving investors with “very limited options to invest in as most counters will generate real negative returns.”

The investment bank says in the weekly research report that attractive counters have been in few sectors such as agriculture and manufacturing.

“Such companies (in the agricultural sector) don’t just have the ability to channel pass-through inflationary costs to their consumers, but also have significant export sales which are boosted by the declining shilling, countering the forex effect,” says the KCB Investment Bank.

It adds that the manufacturing sector which includes Kenya Orchards has been used as ‘inflation-hedges’ because they are involved in the manufacture of various consumables.

NSE data up to Tuesday shows the stock of agricultural firm Kapchorua has gained by 105.3 percent since January to be the best-performing stock as it more than doubled its investors’ wealth.

Kapchorua has added its investors Ksh858.7 million ($5.7 million) to take the combined market valuation to Ksh1.67 billion ($11.15 million).

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Small stocks have benefited from their lower exposure to foreigners, allowing retail investors trading on a mix of fundamentals and speculations to drive up share prices.

The choppy market, where prices have been swinging up and down, has also worked in favour of low-priced stocks where a small change in price means a lot in terms of percentage change.

Investors have also pounced on one-off wins in companies such as Eveready, which announced a business shift into new-age electric battery manufacturing.

“Also, their low prices ensure that a slight change in price leads to significant returns,” says KCB.

Eveready share has moved from Ksh0.71 at the start of trading in January to Ksh1.2, being a 69 percent rise.

Small stocks, including those in the agricultural space— Kapchorua, Kenya Orchards, Williamson and Eaagads— have also benefited since exporters gain when the local currency is losing value.

The share price of Kenya Orchards has appreciated by 87.5 percent to add investors Ksh117.1 million ($781,708) in paper wealth as that of Eveready climbed by 69 percent to add Ksh103 million ($687,503).