NSE turnover more than triples as capital gains tax nears
The Nairobi Securities Exchange. Shares worth Sh3 billion traded at the bourse on December 16, 2014. PHOTO | FILE
What you need to know:
KCB was the largest mover with shares worth Sh1.3 billion traded in block trades at an average price of Sh57 per unit.
Equity Bank traded shares worth Sh665 million at an average Sh51 each.
Safaricom traded over 45 million shares worth Sh637 million attributed to profit taking on the telecom company’s stock which had rallied to all-time highs last week.
Shares worth Sh3 billion traded at the Nairobi Securities Exchange on Tuesday, which was more than triple the number traded the previous day as the capital gains tax implementation loomed.
As at end of October, the total equity turnover at the NSE stood at Sh169.8 billion which was equivalent to an average of Sh680 million daily.
KCB was the largest mover with shares worth Sh1.3 billion traded in block trades at an average price of Sh57 per unit.
“Equity turnover soared 211.1 per cent bolstered by local investor block trades on KCB and Equity Bank which accounted for 65.1 per cent of market activity,” said Standard Investment Bank in a market report.
Local investors were the main participants in the market contributing 70 per cent of the transactions compared to 30 per cent on Monday.
Equity Bank traded shares worth Sh665 million at an average Sh51 each. Safaricom traded over 45 million shares worth Sh637 million attributed to profit taking on the telecom company’s stock which had rallied to all-time highs last week.
The period before Christmas festivities is usually quiet at the market.
The capital gains tax which comes into effect in January will eat into profits made at the securities markets by investors.
Those who have held on to stocks for a long time are likely to be the hardest-hit given the value gain over the length of the period.
However, it is so far unclear if KRA wants to go that route with suggestion that it could come up with a flat tax to avoid heavy paperwork.
“Ideally we had expected turnovers to rise due to the capital gains tax. But those exiting are not dumping the shares; it is being done professionally so that the share prices are not affected,” said Silha Rasugu, an analyst with Genghis Capital.
Two weeks ago, listed investment firm Centum, recorded a block trade of 25,196,700 shares worth Sh1.5 billion. The value of the shares traded on that single day was equivalent to 3.75 per cent of the market capitalisation of the company.
The capital gains tax is being introduced at five per cent on the value gained from time of purchase after deducting transactional expenses.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
