Stockbrokers at the Nairobi Securities Exchange. FILE PHOTO | NMG Investors gained Sh26 billion in paper wealth during Tuesday’s trading at the Nairobi Securities Exchange (NSE), backed by a rebound by the Safaricom stock on news that it has doubled daily transactions to Sh150,000 and mobile wallet to Sh300,000 in response to the coronavirus outbreak.
Although Safaricom scrapped transfer fees for transactions below Sh1,000 to discourage use of cash, the increased transaction limit opens up extra revenue streams for the telecoms operator and increased use of M-Pesa.
The NSE closed trading at Sh2.04 trillion, reversing some of the losses endured by investors in Friday and Monday sessions that saw a total of Sh147.46 billion eroded from the market’s valuation.
Thanks to Safaricom’s gain of 2.7 percent or 65 cents day when it closed at Sh25.10 a share, the market cap weighted NSE all share index rose 1.71 points to close at 133.55.
The price weighted NSE 20 share index, however, declined 5.12 points to close at 2052.85, as constituent stocks such as EABL and BAT Kenya that have a large nominal price did not register gains.
The head of research at AIB Capital, Sarah Wanga, said local investor buying will offer support to the stock market in the face of the ongoing foreign selling.
“Foreign investors are expected to continue to exit the markets as risk aversion increases. Following the recent downturn in the market, a number of value stocks are now very attractive. Local investors (both institutional and retail) are taking the opportunity to purchase the shares at the relatively low prices,” Ms Wanga said.
Interventions by the Central Bank of Kenya to encourage cashless transactions in banks and mobile money operators ahead of key policy meeting on Monday signalled the market for more incentives to the financial sector, which saw banking counters turn the corner.
While KCB Group and Stanbic Bank gained on dividend payments, other banking sector counters also looked positive with gains also on ABSA Bank Kenya and Standard Chartered share prices.
NSE chief executive Geoffrey Odundo said on Monday that local investors had stepped forward and taken positions in discounted stocks, accounting for 49.4 percent of the market activity that day.
On Tuesday they accounted for 37 percent.“It is impressive to see local investors exude confidence in the market and take up more positions. The increased local investor participation and continued trading inflows from the international markets is evidence of the attractive valuation of […]