NSE climbs to six-year high in rush for blue chips
An NSE staffer monitors online trading. Both indices are looking up, showing the rise is across the board. PHOTO | FILE
What you need to know:
The NSE 20 Share index has climbed to 5,163 points representing the highest level since the beginning of July 2008 while the NSE All Share index (NASI) is at an all-time high of 160.24 points.
Large caps of the 20 Share index have been among the top gainers in August when the stock market held above the key 5,000 point mark.
Since the beginning of August, the NSE 20 index has gained 4.5 per cent, while the NASI is up 4.3 per cent.
The Nairobi Securities Exchange (NSE) has risen to a six-year high driven by foreign interest in key stocks over the past month, analysts said.
The NSE 20 Share index has climbed to 5,163 points representing the highest level since the beginning of July 2008 while the NSE All Share index (NASI) is at an all-time high of 160.24 points.
Large caps of the 20 Share index have been among the top gainers in August when the stock market held above the key 5,000 point mark. The gain by the two indices indicates the upturn is fairly spread across all share categories.
“The key catalyst for the rally has been foreign investors who have continued to upsize exposure to blue chip stocks. Interestingly in 2014, we have also seen small and medium size cap stocks attract demand. This broadening out is a very positive thing,” said Aly-Khan Satchu of Rich Management.
Since the beginning of August, the NSE 20 index has gained 4.5 per cent, while the NASI is up 4.3 per cent.
In year-to-date gains the NSE 20 index that remained largely flat through the first seven months of the year (at 0.3 per cent up to end of July) is now up 5.2 per cent, a situation informed by the recent gains.
The All Share index year-to-date gains stand at 17 per cent. Over the past three years the NASI has gained 115 per cent, leaving the equities market ahead of other investment classes in returns over the period.
According to Mr Satchu, should the current market trend continue the NSE 20 index could touch 5,400 points before the end of the year or a seven-year high.
BAT that gained 19 per cent in August was the key mover of the indices with the stock now trading at Sh800 on tight supply and insatiable institutional demand.
The market’s largest cap Safaricom is up six per cent since the beginning of August to trade at nearly all-time high price of Sh13.40.
Safaricom gain, apart from helping push up the index, has also boosted the total market capitalisation of the NSE to Sh2.24 trillion. The telco is currently valued at Sh536.90 billion riding high on the recent State security tender.
Kenya Power and KenGen have also reversed declining trends in the past month, with the two counters gaining 19 and 12 per cent respectively, amid positive news surrounding the Kenyan energy sector.
“The recent US-Africa summit promised additional fiscal support for the energy sector. We also have KenGen bringing onstream the geothermal production in Olkaria, and for Kenya Power, there is even more power in the horizon with the coal plant in Lamu and the wind projects,” said Old Mutual Securities analyst Halima Saadia.
“The shares have also been under-priced, with investors taking time to see whether the big capital expenditures would start to be matched by delivered projects.”
As the sole distributor, extra power even if from independent power producers is an advantage for Kenya Power that is modernising its distribution network to cut power losses.
Bank stocks have also been a factor in the index gain with Equity and KCB leading the sector on strong foreign demand to gain 6.6 and 6.4 per cent in the past month to Sh48.50 and Sh58.50 respectively.
ARM Cement that has also attracted foreign demand is up 11 per cent over the same period to Sh88.
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