Pedestrians walk past an Equity Bank branch. PHOTO | FILE
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Analysts saw the hand of speculators following the release of Kenya’s largest bank by customers’ third quarter results.
Equity Bank topped in net foreign outflows at the Nairobi Securities Exchange (NSE) in the month of October as foreigners took more money out than they brought to the bourse. According to data from Standard Investment Bank (SIB), Equity Bank share saw a net outflow of Sh1.5 billion. Others in the top three in net outflows were BAT and Safaricom.
Analysts saw the hand of speculators following the release of Kenya’s largest bank by customers’ third quarter results.
“Equity Bank’s loss in the month of October could have had something to do with the pursuit of the mobile virtual network operator (MVNO) business. Certainly investors had speculated after the new business came to light,” said Stella Wambugu, a research analyst at SIB.
When the issue of the MVNO was brought before a parliamentary committee, questions arose as to whether an independent party should have been asked to advise on whether the Equity Bank SIM would interfere with other SIM cards.
While the Communications Authority of Kenya maintained that it had given the bank the go-ahead for the business and that it was the final authority on the matter, the Committee maintained that it also had a say – thereby causing some uncertainty. Equity Bank posted a credible 26 per cent jump in net profit in the nine months ended September to Sh11.2 billion.
Ms Wambugu said the factor — uncertainty surrounding the MVNO licence —– could also have affected the Safaricom stock which saw its price not only fall, but some of the foreign investments selling.
In terms of net inflows of foreign investments to the NSE, Kenya Commercial Bank led with Sh699.8 million with East African Breweries second with 143.1 million. They were followed by energy sector companies KenolKobil and Kenya Power. KenolKobil saw an inflow of Sh105.1 million while Kenya Power’s inflow was Sh92.8 million.
“The release of financial results by the energy companies is what might have drawn investors to the stocks,” said Ms Wambugu.
For Kenya Power, in the year to June 2014, profit after tax rose by 87 per cent to Sh6.456 billion from Sh3.445 billion in the same period the previous year.
KenolKobil, which experienced net inflows, more than tripled its net profit to Sh531 million in the six months to June 2014 compared to Sh147 million realised in the same period in the previous year.
Though it was not among the top five companies receiving inflows, Uganda-based Umeme Limited was another energy firm with net inflows of Sh28.15 million. Other firms that received net inflows were Athi River Mining, TPS Serena, Coop Bank and Centum. Some of the shares were sold as blocks from some large institutional investors to foreign investors.
“For some of the stocks, we saw a number of blocks of the shares being sold by local institutional investors … selling to foreign shareholders,” said Ms Wambugu.
In total, the market saw a net outflow of Sh1.2 billion as emerging and frontier markets continued to lose out.
