Capital Markets

NSE drops Sh28bn as blue-chip stocks set new lows

nse

Nairobi Securities Exchange (NSE) on the trading floor at the Exchange building in Nairobi on August 26, 2020. PHOTO | SALATON NJAU | NMG

The value of the stock market fell by Sh28 billion on Wednesday when a number of blue-chip firms traded at new 52-week lows in the ongoing bear market.

Total market capitalisation declined to Sh1.847 trillion Wednesday from Sh1.875 trillion on Tuesday, with share prices of major firms such as Safaricom, Equity Group, and East African Breweries Plc (EABL) falling further and contributing to most of the paper losses.

The telco closed at an average of Sh23.45, having touched lows of Sh23.3 in the trading session. The firm has declared a final dividend of Sh0.75 per share.

The date for book closure and payment of the dividend is yet to be announced.

Equity’s share price averaged Sh39 and had recorded lows of Sh38.75. The bank closed books for its Sh3 per share dividend on Monday.

EABL’s stock closed at an average of Sh118.75 on Wednesday, having touched lows of Sh118.

Other big companies listed on the Nairobi Securities Exchange that recorded price declines include Stanbic Holdings and Absa Bank Kenya.

A total of 22 stocks were in the red while 20 firms saw a rise in their share prices.

Analysts have blamed the selloff on foreign investor flight, adding that the exodus is not a reflection of the listed firms’ current or future prospects.

“We urge local investors to take advantage of the foreign exits by taking up positions at the current valuations,” stockbroker AIB-AXYS said in a market brief.

“Overall, most of the listed counters are fundamentally sound with religious dividend payments are pursuing growth opportunities and have historically delivered value.”

The bear run has lifted the average dividend yield on bank stocks to nearly 10 percent, benefitting those buying the counters at the current levels with a long-term investment horizon.

[email protected]