NSE gains Sh96bn, biggest one-day jump in 18 months

Nairobi Securities Exchange (NSE) logo on the trading floor. FILE PHOTO | NMG

The Nairobi Securities Exchange (NSE) added Sh95.53 billion in investor wealth on Tuesday, its biggest single-day gain in 18 months, as blue-chip firms led by Safaricom continued their recent price rally on local investor demand.

The NSE’s market capitalisation stood at Sh1.831 trillion at the close of trading, the highest since October 3, 2023. The last time the market rose by such a daily margin was on September 6, 2022 (Sh102.7 billion), the day after the Supreme Court ruled to uphold President William Ruto’s win in the 2022 General Election.

The ruling saw the market gain Sh153 billion on September 5 and September 6, 2022, before a price correction over the next seven days slashed Sh233 billion from the NSE’s market capitalisation.

In this week’s trading, local investor demand has been driving the market, with analysts saying that local investors have been snapping up shares to avoid missing out on an attractive entry point as share prices trend upwards.

“The rally is driven by local investors, more so institutional investors who have large tickets on blue chips. They see the market approaching its trough with a likely Federal Reserve rate cut in June and a positive MSCI review following the recent gains and stability of the shilling,” said Stellar Swakei, an analyst at Standard Investment Bank.

“Furthermore, macroeconomic indicators are displaying signs of improvement, potentially bolstering investor sentiment and thus buying activity, consequently driving prices upwards.”

Foreign investors have been net sellers at the NSE over the past week, taking out a net of Sh153.9 million on Tuesday to add to the net sales of Sh917.6 million on Monday. Last week, they made net sales of Sh120.8 million.

In Tuesday’s trading, Safaricom led all stocks with a market cap gain of Sh66.1 billion to end the day with a valuation of Sh771.3 million, having seen its share price rise by 9.4 percent on the day to close at Sh19.25.

The day’s biggest gainer in terms of share price movement was KCB, which rose by 9.6 percent to close the day at Sh29.80 a share, adding Sh8.4 billion to its market capitalisation.

Other top gainers in market capitalisation were Equity Group, which added Sh10.75 billion in market cap as its share price went up by 6.1 percent to Sh49.20, and NCBA, which added Sh2.8 billion on the back of a four percent gain in share price to Sh44.55.

Banks have been among the top gainers in the market over the past two weeks, partly on investor expectations of higher dividend payouts from the lenders as they announce their 2023 financial results.

The sentiment of foreign investors has also been improving following an improvement in the availability of foreign exchange in the country.

Dollar supply problems in 2023 discouraged foreign investors from coming into the market due to difficulties in repatriating capital gains and dividends.

The investors were also wary of exchange losses upon exit due to a weakening shilling against the dollar, effectively locking them in the market.

The recent strengthening of the shilling—which is up by 18 percent versus the dollar this year—coupled with an improved forex market, has unlocked the supply of shares from foreign investors.

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