Capital Markets

NSE shareholder wealth shoots up Sh114b in 6 weeks

BDNIC1709A

NSE CEO Peter Mwangi, NSE vice-chairman Bob Karina, NIC chairman James Ndegwa and NIC Bank group managing director John Gachora during the bell ringing for the bank’s bond at the NSE on September 17, 2014. PHOTO | DIANA NGILA

The Nairobi Securities Exchange (NSE) has generated Sh114 billion in new wealth over the past six weeks as the market touched a six-year high.

Stocks in the insurance, banking, investment and energy sectors have rallied to push NSE total market capitalisation to an all-time high of Sh2.66 trillion, with the 20-Share index surpassing the 5,200 mark.

The underwriting segment has led the exchange in value growth, gaining 32.3 per cent or Sh34 billion to Sh139 billion since the market crossed the 5,000 points on August 5.

Britam accounted for half the sector’s gains with 39 per cent rise to Sh32, lifting its value by Sh17 billion to Sh60.5 billion. The firm is in the process of buying Equity Bank’s 24.7 per cent stake in Housing Finance.

“Insurance firms are seeing benefit of diversification from the traditional business to other sectors such as real estate, which has particularly helped Britam. Investors also see a possible upside on earnings from a potential increase in market size, considering the penetration of insurance is still low,” said Old Mutual Securities analyst Halima Saadia.

CIC Insurance and Jubilee Holdings have also performed well over the past month gaining 12 and 11 per cent to Sh8.95 and Sh421 respectively.

In monetary terms, the banking segment has registered a gain of Sh55 billion to Sh885.6 billion. Banks lagged behind insurance, having added 6.7 per cent with NIC and Equity being the top gainers.

NIC has risen 20 per cent to Sh72.50, lifting its valuation by Sh7.16 billion to Sh43 billion. The lender has just concluded a successful Sh5 billion bond issue and plans a rights issue by year end.

READ: NIC Bank takes Sh5bn in oversubscribed bond issue

Equity’s 14.6 per cent gain in price to Sh53 has seen it inch closer to Sh200 billion value. It is currently valued at Sh196 billion, having added Sh24 billion since the beginning of August.

The counter has been boosted by the imminent roll-out of its telecoms arm under Finserve following an award of a one-year licence by the Communications Authority of Kenya. The permit will see it compete against Safaricom in the lucrative mobile money transfer business.

READ: Mobile plan lifts Equity stock value to all-time high

“The recent downward revision of tariff for mobile money relays of up to Sh1,500 by Safaricom is a clear signal that the anticipated entry of Equity Bank could present a major shake-up,” said risk and research firm Stratlink Africa in its September Kenya market outlook.

Safaricom accounting for 23 per cent of the NSE’s market capitalisation at Sh516.8 billion added Sh16 billion over the past six weeks after clinching a national security tender.

READ: House team clears Safaricom security tender award

The energy and investment sectors have gained 22.5 and 7.7 per cent respectively in capitalisation to Sh103.3 billion and Sh46.9 billion, buoyed by improved performance of stocks like Kenya Power, Total and Centum.

The listing of the NSE share has boosted the valuation in two weeks after appreciating by 147 per cent to Sh23.50 from an offer price of Sh9.50.This has added Sh2.7 billion to the valuation.

The construction and commercial sectors have moderately shed value though. Construction is down four per cent at Sh111 billion with Bamburi losing 11 per cent from Sh156 while in the commercial sector the value loss is at 1.6 per cent to Sh103 billion.

Manufacturing remains flat with a Sh14 billion cap gain by BAT (up 20 per cent to Sh819) countered by a Sh15 billion decline in EABL value.

[email protected]