Standard Chartered has lost nearly a quarter of its value at the Nairobi Securities Exchange (NSE) since the closure of its books for bonus and dividend issues.
The bank closed Friday at Sh191 a share, down Sh59 from Sh250 previous Friday when the register on the dividend of Sh17 per share and a bonus issue of one-for-nine closed.
In the one month between the bonus and dividend announcement and the closure of the register (March 23 to April 22), the stock had gained 20.2 per cent.
“The rally before April 22 was driven by the bonus issue, with investors normally looking to sell at a premium before registers close on bonus shares,” said Sterling Capital analysts Eric Munywoki.
“Ideally, when bonus shares are issued the share price of a counter should naturally adjust downwards in a similar proportion, and this adjustment starts immediately the register closes. This is why we have seen the price of Standard Chartered erode.”
Standard Chartered (StanChart) currently has 309.16 million shares in issue, which will rise to 343.5 million when the new bonus shares are listed.
StanChart which issued a profit warning last November reported an after-tax profit of Sh6.3 billion last year, down from Sh10.4 billion in 2014.
It however retained its dividend at Sh17 a share, keeping one of the highest dividend yields in the market at 8.37 per cent. This makes the counter attractive to dividend-seeking investors ahead of book closures.
Investors in the stock market have in the past pushed for share splits on a number of nominally highly priced shares that include StanChart and BAT, saying that this would make them more accessible to small retail investors who would otherwise be put off by the high entry price.
Last month, StanChart chief executive officer Lamin Manjang said that the extra 34.5 million shares will boost the liquidity of its stock thus removing the need for a share split.
“We have responded on the issue of bonus shares. We believe that is the right thing to do,” Mr Manjang said.
The stock has historically been among the more illiquid in the market due to the nature of the shareholding, with Standard Chartered Plc the majority shareholder holding 73.9 per cent (as per December 2015 filings).
Local institutions hold a further 14.48 per cent in the lender, leaving just 10.5 per cent in the hands of local retail investors.
The stock was a week ago removed from the list of constituent stocks of the NSE 20 share index.
To determine constituent counters, the NSE targets companies with at least 20 per cent free float, a minimum market capitalisation of $198,000 (Sh20 million) and counters that are actively traded.