An investor on the NSE trading floor during the opening of the Exchange Building in Nairobi. Photo/FILE
What you need to know:
Banking segment at the NSE has seen a collective gain of 13 per cent between January and April, translating into Sh80 billion increase in the segment’s market capitalisation to Sh770.3 billion.
Bank stocks are among those attracting sustained demand from both foreign and local investors this year on account of financial returns in the sector.
Insurance segment has recorded a gain of 30 per cent, with a market capitalisation of Sh110 billion.
Bank and insurance stocks have rallied in the year to date, helping investors balance out the negative returns from industrial and manufacturing shares at the Nairobi Securities Exchange (NSE).
The banking segment at the NSE has seen a collective gain of 13 per cent between January and April, translating into Sh80 billion increase in the segment’s market capitalisation to Sh770.3 billion.
CfC Stanbic is the biggest gainer among banks this year, with share price up 43 per cent to Sh125. Co-operative Bank, Equity Bank and Diamond Trust Bank have also seen gains of 29, 21 and 20 per cent respectively from the start of the year.
Bank stocks are among those attracting sustained demand from both foreign and local investors this year on account of financial returns in the sector.
“CfC Stanbic has been seen by some investors as an undervalued stock for some time. Fundamentally it is doing well in asset financing and in its custody arm,” said Old Mutual Securities research analyst Geoffrey Maina.
The insurance segment has recorded a gain of 30 per cent, with a market capitalisation of Sh110 billion.
Stocks in the segment rallied strongly this year as investors took position in anticipation of improved results, while also factoring in regional expansion drives initiated by some of the listed insurers.
Each of the six listed insurance firms has registered at least 10 per cent in share price rally in 2014, led by CIC Insurance that is up 64 per cent to Sh9.75 and Pan African Insurance up 49 per cent to Sh134.
“The insurance industry in Kenya and the region is set to register significant growth in the next decade. This is informed by the growing middle-class and the low insurance penetration levels that stand at three per cent in Kenya,” said risk and research firm Stratlink Kenya in its April markets update.
On the other side, the construction and allied, commercial and services, energy and manufacturing segments have recorded declines in this year.
Cement stocks have registered mixed fortunes, leading to the construction segment shedding eight per cent.
East Africa Portland Cement is up 35 per cent so far to Sh93.50, but other cement firms, Bamburi and ARM Cement, continue to see negative movement in share price, down 14 per cent and five per cent respectively at Sh181 and Sh85.50.
Manufacturing firms have seen limited gains this year, with analysts saying the stocks are more susceptible to pressure from regulatory and economic changes.
“The construction, services and manufacturing sectors as a whole are consumer driven, and changes in regulations such as those we saw in VAT tend to impact more on these types of companies,” said Mr Maina.
One of the large cap stocks in the manufacturing segment, EABL, has already seen some negative impact of the recent tax changes, especially on its low income-targeting keg beer.
The firm’s stock remains flat this year, standing at Sh290, with the segment as a whole down 2.4 per cent.
The biggest decliner in the commercial and services segment which has seen constituent stocks decline by a collective four per cent is Uchumi, down 25 per cent at Sh14.30.
The NSE 20 share index is up 0.9 per cent to 4958 points since the beginning of the year, while the NSE All Share Index is up 10 per cent at 150 points. This reflects the gains made by the small and medium counters, which have outpaced growth in big counter prices.
