Poor half-year results posted by bigger firms at the Nairobi Securities Exchange have sent investors in a panic mode, pushing the rich stock to a new 17 year low.
The market summary by the Nairobi bourse shows the NSE 20 that tracks the wealthiest stocks dropped to 1,729.46 points on Tuesday, 65 points lower than 1,794.6 posted on August 5.
The last time the richest index dropped close to this range was on July 24, 2003, when it closed the day at 1,948.5 points.
The new low now pushes the current bear market to five-and-a-half years, with the index falling 69 per cent from the peak of 5,491.3 points recorded on February 2, 2015.
Analysts are linking the significant drop to poor performance by major stocks, especially in the banking sector following a huge drop in profits for the first six months of the year due to the negative effects of coronavirus on the economy.
On Tuesday, Equity Bank Group, one of the big fives at the Nairobi bourse posted a 24 per cent drop in net profit to Sh9.1 billion compared to a similar period last year on high loan provision which grew 15 folds.
Although the firm’s share price at NSE improved slightly to Sh30.80 from Sh30.25 the previous trading day, there were more offloads than buys, with volumes traded dropping to 817,800.
The share price has been on the downward trend, shedding Sh4 in a month. It traded at Sh34.40 on July 17.
Equity Bank’s profit drop took a cue from other top lenders: KCB Group and Cooperative Bank Group, which reported 40 per cent and 3.6 per cent drop in profits respectively.
KCB, Kenya’s largest bank in terms of assets posted Sh7.6 billion in after-tax profits for the first six months of 2020, a decline from the Sh12.7 billion reported a similar period last year.
Even so, its share closed the market at Sh31.50 on Tuesday, 30 cents higher than Monday after picking up from the Friday loss. Coop Bank’s share price stagnated at 10.50.Safaricom which commends slightly above 50 per cent of total trading at NSE, lost 40 cents on Tuesday to sell at sh28.East African Breweries Limited (EABL), which recorded a nine per cent decline in net sales for the financial year ended 30 June 2020, has been trading at a flat low of Sh154.According to a recent market soundness report by the Capital Market Authority (CMA), the five firms increased market dominance […]
