Safaricom headquarters on Nairobi’s Waiyaki Way. PHOTO | DIANA NGILA The value of investor wealth on the Nairobi Securities Exchange (NSE) hit a year high of Sh2.5 trillion on Friday, lifted by a record rally of the Safaricom share price.
The Safaricom share touched a new all-time high of Sh38.50 in Friday’s trading following the announcement of a Sh0.45 per interim dividend, lifting the Nairobi bourse to levels last seen in February last year before the first case of the coronavirus was reported in the country.
“We have seen the surprise dividend announcement at Safaricom and East African Breweries rally over the past two weeks, and that has sort of lifted the market. I think the rally is still very restricted and is not the entire bourse. The market is picking up success stories and running with it,” said Eric Musau, head of research at Standard Investment Bank.
The upturn marks a relief for the bourse where activity has remained subdued for months as foreign investors rushed to sell off their exposures in emerging markets, wiping out billions of shillings worth of paper wealth by Kenyan investors.
For example, data by the Capital Markets Authority (CMA) shows that volumes traded decreased by 24.85 per cent to 969.57 million in quarter four of 2020 compared to 1.29 billion in quarter four of 2019.
“Equity turnover for quarter four of 2020 stood at Sh27.51 Billion, compared to Sh45.01 billion registered in quarter four of 2019; a 38.88 per cent decrease, confirming a decrease in investor participation at the bourse,” CMA director regulatory policy & strategy Luke Ombara said.
The Covid-19 pandemic has negatively affected the performance of many listed firms, forcing them to suspend cash distributions as a result of weaker earnings.
Safaricom is among the few listed firms that have maintained dividend payouts, leaving investors to scramble for their stocks.
The telecoms operator’s dividend announcement was a surprise to the market, given that it ordinarily does not pay interim dividends at the half year stage.
The announcement on Thursday helped rally the share price by 3.84 percent to close the day at Sh37.80 from the opening price of Sh36.40 as investors scrambled for a piece of the firm’s Sh18 billion interim dividend payout on which books close on March 5.
On Friday, the stock’s gains extended further by 1.6 percent on the back of healthy demand from investors, pushing the capital gains in the counter in the last two sessions […]
