Safaricom loses Sh38bn market cap in four days as NSE slide gathers pace
An investor monitors the digital board at the Nairobi Securities Exchange. The market has shed Sh77.3 billion in the past four days. FILE
What you need to know:
The Safaricom share closed at Sh11.50 Thursday down from Sh11.85 a day earlier, with its market capitalisation dropping to Sh460.6 billion.
The market has shed a total of Sh77.3 billion in the past four days.
The NSE 20-Share Index lost 54.68 points Thursday to close below the 5,000 points for the first time since January 8 at 4,960.99 points.
Safaricom has lost Sh38 billion market valuation in the past four days battered by foreign investor exits that saw the market tracker NSE 20-Share Index fall below the 5,000 points mark for the first time in over three weeks.
The Safaricom share closed at Sh11.50 Thursday down from Sh11.85 a day earlier, with its market capitalisation dropping to Sh460.6 billion barely four days after almost touching the Sh500 billion mark at the close of trading last Friday.
The market has shed a total of Sh77.3 billion in the past four days.
Thursday the market lost Sh31.2 billion, a day after the Federal Bank of United States announced further cuts to its stimulus programme that has been the main supplier of funds invested in emerging and frontier markets such as Kenya over the past five years.
“There is a lot of foreign exit from emerging markets and we have seen profit taking by foreign institutional investors,” said Eric Munywoki, a research analyst at Old Mutual.
The NSE 20-Share Index, which tracks changes in prices of 20 select stocks at the bourse, lost 54.68 points Thursday to close below the 5,000 points for the first time since January 8 at 4,960.99 points.
The IMF had warned that tapering in the US was likely to affect the Kenyan market which has seen heavy foreign investor presence.
As at November foreign investors owned 22.4 per cent of the Kenyan equities market.
“Most of the emerging markets have raised their interest rates which tell you there is going to be pain for some time,” said ABC Capital manager for corporate finance and advisory Johnson Nderi.
Though Kenya is a frontier market investors have mainly clustered it among emerging markets given its position in Sub-Sahara Africa.
On Thursday most counters were on the losing side as investors moved out to count gains made so far after a strong rally which saw the total market valuation surpass the Sh2 trillion mark.
Mr Munywoki however holds that the drop follows short term correction but full-year results that are expected to start trickling in from next week will calm investors’ nerves.
“Local companies have potential for growth which is likely to trigger activity in the local market,” he said.
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