Safaricom’s market valuation now outstrips the combined capitalisation of the next nine largest companies at the NSE, meaning the telecoms operator accounts for 40 per cent of the bourse’s total investor wealth.
The telecoms firm’s market valuation of Sh719 billion is Sh29 billion more than the combined market caps of EABL, Equity Bank, KCB, BAT Kenya, Standard Chartered, Cooperative Bank, Bamburi Cement, Barclays Kenya and KenGen. Previously its value was equal to the next top four.
Safaricom has been the best performing NSE top 10 counters over the past one year, with a share price gain of 10.5 per cent.
BAT follows with a 6.4 per cent gain, while the other eight counters have shed between 13 and 37 per cent over the period. The difference in performance of the two most commonly used indices at the NSE reflects the oversized impact of Safaricom’s large market cap.
The NSE All Share Index, which is market cap-weighted — hence Safaricom carries more weight here — has significantly outperformed the price-weighted NSE 20 share index over the past year, recording a softer decline of 12.7 per cent versus 24 per cent for the 20 share.
“Before putting money into the market, an investor needs to look at all the indices to get a balanced view. Given its higher weighting on the NSE All share index, Safaricom will influence this index more than it will the 20 share index,” said Sterling Capital head of research Eric Munywoki.
EABL remains the second largest listed firm with a market cap of Sh170 billion, with no other firm hitting the Sh100 billion mark.
Equity Bank is valued at Sh97 billion while BAT Kenya has overtaken KCB into fourth with a valuation of Sh85 billion compared to the bank’s Sh81.3 billion.
StanChart (Sh61.8 billion), Co-operative Bank (Sh59.2 billion), Bamburi (Sh56.3 billion), Barclays (Sh44.3 billion) and KenGen (Sh35.3 billion) complete the top 10.
Top 10 firms account for 78 per cent of the market’s total capitalisation, which now stands at Sh1.79 trillion, as well as a similar share of traded turnover.
Analysts say that this skewed distribution does not help the market grow, with institutional investors being forced to look at a small pool of counters that they can trade sufficient volumes.
The NSE has not been helped by the lack of a regular pipeline of big listings, which would expand the pool of large firms and also bring new investors into the market.
“If you take a look at the equities market as it is at the moment, trading activity is skewed; about 10 counters account for more than 80 per cent of trading volumes and market capitalisation out of 66 listings. This in itself is a market aberration,” said Dyer & Blair Investment Bank head of research Linet Muriungi.