A display of listed equities at the NSE Photo taken on August 1,2019. PHOTO | CITIZEN DIGITAL The poor results which are largely triggered by the COVID-19 pandemic are further expected to keep the NSE on a bear run as participants particularly foreign investors stay away.
Cumulatively, top banks along with Safaricom and KenGen hold an 85.7 per cent market concentration rate as of September revealing their stocks weight on the performance of the NSE.
The NSE however remains with lucrative entry points for new investors with the current price to earnings ratio standing at 9.6 times, 25.8 per cent below an 11-year historical average of 13 times.
Investors in publicly listed firms at the Nairobi Securities Exchange (NSE) are set for barren dividends returns for the year as companies continue to register dismal trading results.
The poor results which are largely triggered by the COVID-19 pandemic are further expected to keep the NSE on a bear run as participants particularly foreign investors stay away.
Banking industry stocks which largely draw investor interests ahead of the close of the financial year are seen taking a beating in price as the lenders omit the traditional annual dividend.
Lenders such as KCB and Absa have for instance recorded a steep decline in earnings across nine months to September on high loan-loss provisions occasioned by increased borrower risks.
“Investors are likely to shy away from banking stocks because of the lack of dividends. Traditionally, investors have made a rush for banking stocks ahead of the annual reporting season and subsequent book closures,” noted Sterling Capital Head of Research Renaldo D’Souza.
Analysts at Genghis Capital has already fore warned missed dividends from commercial banks this year with lenders such as Equity , NCBA and Standard Chartered having already pruned, pulled or adjusted pay outs to shareholders from their 2019 earnings.
“This is mainly due to uncertainty about the current environment rather than concerns on capital positions. For the full year, we do not expect Equity Group to make a final dividend payment,” the analysts had stated in an August banking sector note.
Combined, listed banks comprise of the top 10 companies at the NSE by both market capitalization and turnover according to statistics by the Capital Markets Authority (CMA).Meanwhile, market leader Safaricom has also seen its earning dented by the pandemic with free-cash transfers below Ksh.1000, occasioned by the crisis eating into the telco’s profit by six percent through six […]
