Capital Markets

AccessKenya exit leaves NSE shy of Sh2 trillion mark

An investor looks at the Nairobi Securities Exchange electronic board. Market capitalisation closed at Sh1.99 trillion. FILE
An investor looks at the Nairobi Securities Exchange electronic board. Market capitalisation closed at Sh1.99 trillion. FILE 

The total value of companies listed on the Nairobi Securities Exchange failed to hit the anticipated Sh2 trillion mark yesterday following the delisting of telecommunications firm Access Kenya.

Market capitalisation closed at Sh1.99 trillion as share prices surged northwards driven by improved company performances that have sustained high investor demand for listed stocks.

On Thursday Access Kenya was delisted from the bourse following its acquisition by South Africa’s Dimension Data, knocking Sh2 billion off the total market valuation.

“It (the rise) is supported by fundamentals such as company performances combined with investors’ economic and political perspectives,” said senior consultant at Emexea Consultants, John Kamunya.

Investors’ wealth at the stock market has grown by Sh112 billion during the month, from the opening market capitalisation of Sh1.88 trillion.

Safaricom has been the main driver of the rise in market capitalisation, with its value increasing by Sh58 billion as its share price rallied to hit record high of Sh11 per unit.

Britam Insurance has gained Sh9.6 billion following disclosure that it will be acquiring a smaller rival, Real Insurance.

The insurance sector’s valuation has also been driven by investors’ expectations of improved performance from the industry which is heavily invested in the equities market. CIC Insurance has grown by Sh2.8 billion, Pan Africa by Sh2 billion and Liberty Insurance by Sh1.7 billion.

“We might have some slight corrections but nothing in the short term has pointed to a turn,” said ABC Capital manager for corporate finance and advisory, Johnson Nderi.

Mr Nderi pointed out that some investors were buying on the hopes that the trend will continue, allowing them to sell at higher prices later.

Banking counters have also been on the rise following release of improved financial performances by listed lenders.

The indicative 20-Share Index has risen by 24 per cent during the year to close at 5,137.21 points yesterday, having breached the 5,000 points mark during the month.

Analysts said market activity was expected to slow down as we head to the festive period before picking up again at the beginning of next year, which may curtail the market surge.

Participation of foreign investors at the Nairobi equities market has also seen the market prices rise with analysts attributing it to their willingness to collect lower margins.

Data from the Capital Markets Authority shows that foreign ownership of shares at the NSE has shot to a seven-year high, totalling nearly a quarter of market value.

“There is international liquidity and we don’t see the rates going up soon,” said Mr Nderi.

Kenya has proved to be a good hunting ground for international investors owing to its liquidity relative to other African markets.

The growth has also been a good surprise to the capital markets regulator who had stated in its five-year strategic plan the desire to see the market capitalisation grow to Sh1.83 trillion in 2014. The market size is 57.8 per cent of the country’s GDP, which is estimated at Sh3.44 trillion.

Expected delisting of CMC Motors and Rea Vipingo could however further subdue market capitalisation. The two, whose trading has been suspended are valued at Sh7.8 billion and Sh1.6 billion respectively.

CMA hopes for increased listings at the NSE mainly through the recently introduced GEMS segment.

The CMA chairman has also challenged the government to consider the listing of some of its mature and profitable institutions such as the National Oil Corporation and the Kenya Pipeline.