NSE up Sh100bn in October on lift by blue chip firms

The NSE gained Sh100 billion market capitalisation in October, pushing investor wealth past the Sh1.8 trillion mark as year-to-date data showed the stock market has risen by about a fifth as at the close of last month.

Total investor wealth at the bourse, commonly referred to as market capitalisation, stood at Sh1.88 trillion on Friday, up from Sh1.77 trillion at the end of September.

The gain in October mirrored September’s Sh100 billion increase in capitalisation from Sh1.67 trillion in August to Sh1.77 trillion. Equity turnover for the month jumped to Sh15.9 billion, up from Sh9.8 billion recorded in September.

According to data from Standard Investment Bank and the NSE, some 20 listed companies saw their market capitalisation increase by a combined Sh108.2 billion in October, but the increase was offset by valuation losses on other counters. The bullish pattern is projected by analysts to hold towards the end of the year. The NSE 20-Share Index is already eyeing the 5,000 points mark with Friday’s closing tally just 11 points shy of this level.

“Going forward, we are of the view that the Nairobi bourse will witness increased activity on the back of expected quarter three earnings posting by listed commercial banks,” said risk and research firm Stratlink Africa in its market review for October.

Bank stocks have been among the most robust in the past month. The big two banks, KCB and Equity, led growth in share price and capitalisation for the banking segment in October.

KCB saw its value at the bourse rise by Sh9.1 billion to Sh144.6 billion, with Equity gaining Sh8.5 billion in October.

Foreign interest remains high at NSE, according to analysts, coupled with renewed appetite for buys by local investors.

“Foreign investor activity remains relatively bullish, with major activity levels occurring on the banking sector,” said Sterling Capital in a market review note. Safaricom extended its year-to-date gain by hitting the Sh9 mark in the month.

The share, which touched an all-time trading high of Sh9.70 on Friday, has gained 88 per cent this year.

All-time-highs

The share, buoyed by foreign inflows, has recorded a series of all-time-highs this year, rising from the initial Sh204 billion to a market record of Sh382 billion at Friday.

This means it could become the first counter to touch a cap of Sh400 billion at the bourse if it reaches Sh10 a share.

Carbacid was the top gainer during October, moving up by 44 per cent to Sh212 after announcing a net profit increase of 22 per cent for the 2013 financial year. The share was boosted by the announcement of a bonus share issue, a total dividend pay-out of six shillings per share and a stock split of five for one, which will increase liquidity in the counter.

Oil marketers Total and Kenol Kobil also recorded gains during the month, with Total being the second biggest gainer in the bourse with a 31 per cent increase in price to Sh24.25, while KenolKobil gained 12 per cent to Sh8.95.

Britam was the third biggest gainer in October with a 27 per cent increase in share price to Sh10.35. Cement manufacturers East African Portland Cement and ARM Cement also recorded significant gains during the month. EAPCC gained 16.4 per cent to close the month at Sh71, with ARM up 11.7 per cent at Sh81.

The earnings outlook for the cement makers was boosted by a return to profitability of EAPCC, which announced a net profit of Sh1.7 billion in 2013 turning around a loss of Sh972 million the previous year.

On the losing end in October, agricultural stocks Williamson Tea and Rea Vipingo saw price declines of 6.4 per cent to Sh218 and 6.3 per cent to Sh26.25 respectively. Mumias Sugar was third with a decline of 5.4 per cent to close the month at Sh3.50.

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