The Nairobi bourse notched up healthy gains in recent days as investors sought to buy stocks at a bargain, hoping for outsized capital gains when the stock market recovers. FILE PHOTO | NMG Investors at the Nairobi Securities Exchange (NSE) have gained Sh264.5 billion over the past month, cutting the coronavirus-driven losses amid an economic shock that towers over the financial crisis a decade ago.
The Nairobi bourse notched up healthy gains in recent days as investors sought to buy stocks at a bargain, hoping for outsized capital gains when the stock market recovers.
The value of all the stocks on the Nairobi bourse stood at Sh2.265 trillion Wednesday compared to Sh2 trillion in April, but remains below the Sh2.6 trillion peak of January 10.
Safaricom , KCB Group , Equity Group and East African Breweries Limited (EABL) accounted for about 82.4 percent of the paper wealth gain over the period, underlining the impact of the four counters in shaping the performance of the NSE.
The four had also accounted for about 72 percent of the paper wealth erosion when the bourse hit its lowest level in mid-March as the spread of the coronavirus and other economic headwinds sparked an exit of foreign investors.
Dealers reckon that demand from local shareholders, especially high-net worth investors, is behind the rally happening in the backdrop of grim performances of national economies.
The start of the dividend paying season has also triggered demand for stocks at blue chip firms that make up the NSE 20-Share Index and set to distribute Sh102.9 billion to shareholders in coming weeks.
“The rally can be partly attributed to Safaricom, which has seen a spike in foreign investor interest. While foreign investors were selling banking stocks, local investors have been buying,” Churchill Ogutu Senior Research Analyst at Genghis Capital said.
The Safaricom share rose yesterday to Sh30.45 a share from Sh26.50 on April 8, adding Sh158 billion to the wealth of the telco’s owners over the past month to Sh1.219 trillion or more than half of the NSE’s value.
This emerged in a period when Safaricom’s net profit jumped 19.5 percent in the year ended March to Sh74.7 billion.
“Banking counters have been solid and we saw a counter like EABL dip significantly, which offered a buying opportunity for investors. So investors are looking at post-Covid 19, while some companies will struggle some companies will still ride the wave,” Mr Musau said.Restrictions imposed to curb the spread […]
