Rout at the stock market hits Kenyan billionaires


Top investors at the Nairobi Securities Exchange (NSE) have posted multi-billion shillings in paper wealth losses as the market shed over Sh500 billion in seven months. FILE PHOTO | POOL

Top investors at the Nairobi Securities Exchange (NSE) including Equity Bank boss James Mwangi and Co-operative Bank’s Gideon Muriuki have posted multi-billion shillings paper wealth losses as the market shed over Sh500 billion in seven months.

The top investors have taken a hit from their large holdings in insurers, banks, manufacturers and other blue-chip companies, which have seen a sustained decline in share prices on a mix of factors, including interest rate hikes in the developed world and the Russian invasion of Ukraine.

The NSE market capitalisation stood at Sh1.77 trillion at the close of trading on Tuesday, down from Sh2.32 trillion on August 11 last year, translating to a loss of Sh547.72 billion.

Equity’s Mr Mwangi, with a 3.38 percent stake in the regional lender, has seen the value of his holding fall by 18.3 percent or Sh1.21 billion to Sh5.39 billion.

Mr Mwangi has taken the hit on the back of Equity’s share dropping from mid-August’s Sh51.75 a piece to Sh42.25 on Tuesday.

The decline has also seen Prof Isaac Macharia, the Equity Group chairman who holds 346,950 shares in the lender take a Sh3.29 million.

Equity’s Mr Mwangi has also lost Sh93.68 million in Britam where he holds a direct stake of 2.97 percent. This is after the insurers’ share retreated by 21 percent to Sh4.75.

The developed markets are currently battling high inflation that has forced their central banks to adjust rates upwards, attracting foreign investors who have been fleeing emerging markets such as the NSE.

Effects of the rate hikes emerged in April when the market witnessed the first round of foreign investors’ exit, triggered by the Russian invasion of Ukraine in February.

Mr Mwangi’s counterpart in Co-operative Bank, Mr Muriuki who holds a 1.75 percent stake in the tier I lender, has seen the value of his stake drop by Sh61.6 million to Sh1.25 billion.

Mr Muriuki, who is also the top individual shareholder in CIC Holdings with a 5.3 percent stake, has seen the value of his stake reduce by Sh1.39 million.

Peter Munga, Mr Mwangi’s village mate and investment partner with a 2.97 percent stake in Britam, has also lost Sh93.68 million in this insurer to leave his direct stake valued at Sh356 million.

Mr Munga’s loss in Britam adds to the Sh146.98 million loss in Equity Group where his direct stake is 0.41 percent.

Seasoned investor Jimnah Mbaru’s wealth in Britam has reduced by Sh243.51 million, while that of Benson Wairegi has fallen by 126.8 million. Mr Mbaru holds a 7.72 per cent stake in Britam, while that of Mr Wairegi is 4.02 per cent.

John Kimani, the top shareholder in Kakuzi with a 32.3 percent stake, has gained Sh109.21 million in the agricultural stock as the share defied the NSE trend to rise by 4.7 percent.

Mr Kimani has, however, lost Sh23.37 million in Centum Investment where he holds a 4.39 percent stake. The investment firm’s share has retreated by 8.2 percent to Sh9.

Investors Baloobhai Chhotabhai Patel and Amarjeet B Patel have seen the combined value of their stakes in Co-op Bank, Bamburi, Sanlam and CIC fall by Sh231.77 million between mid-August and Tuesday

The duo, however, gained Sh146.25 million in Carbacid on their 49.9 percent stake and Sh27.81 million in Absa Kenya and Williamson, to leave their net paper loss in the seven companies at Sh57.7 million.

Paul Wanderi Ndung’u, with stakes in different NSE firms, has seen the value of his eight percent stake in Car & General fall by Sh83.1 million.

Mr Ndung'u also has stakes in Uchumi and Home Afrika—both of which have declined—even as the value of his stakes in Express Kenya and Olympia Capital rose marginally.

Beneficiaries of shares held by the top shareholder in Centum Chris Kirubi, who died mid-June 2021 have seen the value of the 30.94 percent stake drop by Sh164.71 million as the firm’s share dipped by eight percent.

John Kibunga Kimani, with 1.24 percent stake and CEO James Mworia who holds 0.85 percent stake have seen their paper wealth shrink by Sh6.6 million and Sh4.56 million respectively.

Francis Thombe Nyammo, the top individual shareholder in Longhorn Publishers, has seen the value of his 5.88 percent stake in the firm drop by Sh12 million to Sh45.17 million.

While big investors have recorded major paper losses, these are unlikely to be realised since they have the financial strength to ride out bear runs.

This has given them the advantage of waiting for a favourable market to sell part of their stakes while receiving multi-million-shilling dividends annually.

Small investors have traditionally been the victims of bear markets, with some selling at a loss out of panic or when pressed for cash to fund basic consumption.

A major risk event such as the Russia-Ukraine war usually sees investors rushing back to bonds and the safest assets, hurting the flow of foreign investors to the NSE given that the foreigners traditionally account for over half of trading at the Nairobi bourse.

Price drops in the top five counters — Safaricom, Equity, KCB, Cooperative Bank and East Africa Breweries Ltd (EABL) — where NSE investors have tied about 70 percent of their wealth on the bourse has seen equities become one of the worst performing assets classes.

The equities market reversed from the near-12 percent returns of 2021 to negative returns last year and now 2023 as prices of many stocks fall further on the back of reduced appetite by foreign investors in emerging markets.

Over the past year, emerging and frontier equity markets have struggled to compete with the likes of the US market, which has been offering investors higher rates on bonds with an added advantage of safety against the economic uncertainty that has gripped the global economy.

This has seen stable stocks such as Safaricom, which had weathered the Covid-19 economic hardships, take a deep hit.

Safaricom’s share is now trading below Sh20, marking its lowest price since May 2017, when it touched Sh22.55.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.