BAT rides on investor demand to close at Sh702 high

British American Tobacco (BAT) last week closed at an all-time high of Sh702 in spite of the counter closing books for its Sh3.50 interim dividend on Monday.

The counter has ridden the wave of investor demand with attention firmly on its generous dividend payouts equalling the entire net earnings, helping the priciest stock at the bourse register a gain of 17 per cent so far this year.

The subsidiary of the British tobacco giant opened the week at Sh699 and remained unchanged until Thursday when it moved past the Sh700 closing price. Only 38,800 shares traded all week.

The dividend policy (old stocks normally make less investment in their business) combined with low liquidity in the market has led to small volumes trading on the market as investors hold tightly to the mature stock.

READ: BAT Kenya commits to 100 per cent dividend payouts

The banking sector dominated trading during the week with 28 million shares traded, accounting for 36 per cent of the week’s volume.

Analysts see further potential of upward movement for the stocks, which would help the market consolidate above the 5000 point mark where it held all week.

“The continued stellar performance in the banking sector warrants upward revaluation of share prices likely to trigger further accumulation to sustain the market rally,” said Genghis Capital analysts in a market note. 

The sector was busy during the five days as several half-year results announcements revealed good profit. These including major counters such as Standard Chartered, Barclays, Cooperative and CfC Stanbic.

KCB was the most heavily traded counter in the sector moving 8.77 million shares at between Sh53 and Sh57.50 while Barclays Bank, which was up 1.76 per cent to Sh17.30, moved 5.1 million shares.

Turnover decline

The NSE 20 Share Index was up nearly one per cent during the week to stand at 5042 points while the All Share Index (NASI) was up by half a percentage to close at 155.39 points.

Total turnover, however, declined to Sh2.8 billion from Sh4.3 billion recorded the previous week as the number of shares traded halved from 157 million to 80 million.

With listed banks nearly completing their half-year reporting, attention is likely to turn to the insurance sector as investors factor in mixed results following the optimism that has seen the segment lead the NSE in overall share price growth this year.

According to a market note from Standard Investment Bank, investor disappointment in Kenya Re’s new strategy that led to a slower rise in investment income this year compared to 2013 pushed the share price lower by 1.1 per cent to Sh16.90 on Friday.