Financial stocks top performers

Financial stocks have emerged top performers at the Nairobi Stock Exchange in the last six months as a dip in fortunes of technology stocks marks mixed performance for listed equities.

Five of the top 10 performers at the Nairobi bourse over the period were firms in the financial services sector as the stellar performance of banks and insurance companies continues to attract investors.

This comes as technology stocks such as AccessKenya and Safaricom continue to under-perform.

Data from the NSE places coffee grower Eagads as the top performer with a return of 163 per cent in the six months, with CFC ranked third (97 per cent return), Centum Investment (85 per cent), and Pan Africa Insurance is fifth with a 72 per cent return.

Bogged down by a blend of individual factors Safaricom, with a negative 9.3 per cent, AccessKenya (negative 16.3 per cent), BOC Kenya (negative 7.2 per cent), East Africa Cables (negative 16 per cent) and Marshalls East Africa Limited (negative 15.7 per cent) emerged bottom of the pile.

Financial analysts attribute the buoyancy of the financial stock to the improved profitability of the firms, notably commercial banks.

Kenyan banks have reported double and triple digit growth in profits in the first half on the back of a recovery in economic growth, which is building loan books.

But the bottom performers, save for Safaricom, have announced either a drop in profits or flat returns that have kept investors away from the counters.

Safaricom earnings have also come under threat because of stiff competition from its rivals which has led to a fall in airtime tariffs by half, prompting analysts to downgrade the outlook on the share.

Since the start of the year, the benchmark NSE All Share Index has edged up 33.4 per cent from 71.89 points in January to 95.93 points at the close of Tuesday’s trading session.

Analysts expect the market to remain on a steady recovery path in the long term, but there are also expectations that some profit taking will lead to a dip in the share price in the medium term.

Local investor turnover increased 47 per cent to Sh13.8 billion at the end of June, from Sh9.4 billion, while foreign investor turnover increased six per cent to Sh10 billion from Sh9.5 billion over the same period of time.

Total turnover at the bourse increased 26 per cent to Sh23.9 billion, from Sh18.9 billion at the end of April.

But unlike in the past two years where local investors have opted to stay on the market sidelines, an upswing in business sentiment and a recovery of the economy have baited local investors back to the bourse.

The latest half year results posted by Kenyan companies show an up tick in industrial output and retail growth that has translated in higher revenues for corporations.