Nairobi Securities Exchange trading floor. PHOTO | NMG The value of shares traded on the Nairobi bourse yesterday hit a three-year high, buoyed by a rally in Safaricom and banking stocks that has seen investors gain Sh207.5 billion since mid-May.
Nairobi Securities Exchange (NSE) data showed that the market gained for the fifth day in a row to close trading at Sh2.7232 trillion—a value last seen in April 2018.
Safaricom , Equity , KCB , East African Breweries Limited (EABL) and Cooperative Bank of Kenya —which now account for 81 percent of NSE wealth—added Sh191.61 billion in the days since May 19.
This means that the five stocks accounted for 92.34 percent of the additional paper wealth.
The dominance of five out of the 56 active firms at the NSE has exposed the distortion of the bourse’s performance by the blue chip stocks, which is making it difficult for investors to gauge the performance of the NSE.
The NSE seems to be on a bull run and fully recovered from the effects the Covid-19 pandemic, as investors bank on a rollout of vaccines to keep the global economic recovery on track.
Safaricom’s value has increased Sh158.26 billion since May 19, followed by Equity (Sh14.34 billion), KCB (Sh7.23 billion), Cooperative Bank (Sh7.04 billion) and EABL (Sh4.74 billion). The rest of the counters added Sh15.9 billion.
Analysts link the share gains to the sustained recovery of business performance across sectors, dividend declarations and payouts as well as corporate announcements like stock buybacks by firms like Nation Media Group.
“The confidence in equities has been returning on the back of improving business prospects. The recovery in earnings has seen many companies resume dividend payment and this has further given legs to the rally,” said Churchill Ogutu, Genghis Capital senior research analyst.
“We have also seen a lot of announcements among the large and middle level companies such as Safaricom, I&M, Nation Media Group (NMG) and Nairobi Business Ventures (NBV). This has given stocks some positive momentum in the short run.” I&M announced a bonus issue while NBV has lined up Sh18 billion to launch into cement manufacturing, vehicles repair and airline servicing.
NMG on Monday started buying up to 10 percent of its issued shares in Kenya’s first-ever public stock buyback programme, offering investors a chance to cash out. The media house’s stock has gained 59 percent since the start of the year while NBV has seen a 130 percent jump. The […]