Capital Markets

NSE hits record high on Safaricom, banks

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A stockbroker at the Nairobi Securities Exchange trading floor. FILE PHOTO | NMG

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Summary

  • Investors’ wealth on the Nairobi Securities Exchange (NSE) hit an all-time high yesterday, adding Sh70.24billion in a single day, buoyed by a rally of Safaricom and bank stocks.
  • Market data shows the market recorded the sixth straight day of gains to close valued at Sh2.921 trillion— the highest in the history of the bourse.

Investors’ wealth on the Nairobi Securities Exchange (NSE) hit an all-time high yesterday, adding Sh70.24billion in a single day, buoyed by a rally of Safaricom and bank stocks.

Market data shows the market recorded the sixth straight day of gains to close valued at Sh2.921 trillion— the highest in the history of the bourse.

Safaricom #ticker:SCOM, Equity #ticker:EQTY, KCB #ticker:KCB, and East African Breweries Limited #ticker:EABL (EABL) stocks led in the rally and added investors Sh99.57 billion between Wednesday last week and Tuesday, accounting for 92. percent of the Sh107.72 billion gained on the NSE during this period.

The four now have a joint market value of Sh2.301 trillion or 78.8 percent of combined NSE wealth, with their shares having appreciated by between 0.6 percent and 6.9 percent since last Wednesday.

Geoffrey Odundo, the chief executive officer of the NSE, attributed the historic rally to a rebounding economic environment and investor confidence in the business models adopted by firms keen on shaking off the knocks of the Covid-19 pandemic.

“This is the highest we have seen in this market. It is a history for the market. The positive sentiments are largely driven by good expectations on the performance of companies this year. Businesses have been resilient and their fundamentals are strong,” Mr Odundo told the Business Daily.

“Businesses have been putting in place post-Covid recovery models to insulate them from losses and ensure resilience and investors are buying into this.”

Yesterday’s performance also means that the NSE has now added Sh704.18 billion since January, with over 30 stocks having added wealth to the investors.

The latest NSE performance offers a reprieve to investors given that they saw a Sh322.74 billion loss on their wealth last year as they dumped equities to seek shelter in bonds and gold at the onset of the pandemic.

The Safaricom stock is benefiting from the news of Ethiopia entry and the recent confirmation that the Horn of Africa nation will soon allow for mobile money licence.

The telco’s share has been on an upswing and closed yesterday at Sh44.90 — a new all-time high — adding investors Sh78.13 billion since Wednesday last week.

Safaricom closed yesterday valued at Sh1.798 trillion, which is equivalent to 61.6 percent of the NSE wealth, coming ahead of the payment of its Sh36.86 billion dividends at the end of the month.

Banks have seen a rise on their stocks after the first half results sent the clearest indication that the sector has come out of the Covid-19 downturn, heralding a resumption of dividends for shareholders.

Fresh data by the Central Bank of Kenya (CBK) yesterday showed that commercial banks’ six-month profits before tax jumped 61 percent to Sh96.4 billion — a performance that has deepened investors’ interest.

“Foreign investors are showing increased interest and this speaks to the positive outlook on Kenya and the capital markets on the back of the numbers that speak to recovery and resilience,” said Mr Odundo.

Equity, which yesterday posted a 98 percent jump in half-year net profit, saw its share hit a new high of Sh53, meaning that its investors have now gained Sh10.77 billion since last Wednesday.

KCB, which will release its results on Thursday, has also added Sh10.28 billion in a similar period while EABL’s value has appreciated by Sh790.77 million.

EABL, which posted a marginal drop in profit for the year to June 2021, is counting on the easing of Covid-19 containment measures to boost performance.

Relaxed Covid-19 control measures such as reduced curfew hours, unrestricted movement across counties, and expanded operating hours for bars and hotels have helped many sectors to recover.

The easing of restrictions has offered a boost to sectors such as aviation, tourism, manufacturing, and hospitality, allowing them to repay loans and tap into fresh credit to fund recovery and growth.

The half-year earnings for 2021 have now surpassed the pre-Covid high of Sh85.8 billion recorded in the first six months of 2019.

The proportion of non-performing loans to the sector’s loan book stood at 14 percent last month—the lowest in eight months. It was at 13.6 percent in October last year.

The CBK said manufacturing, agriculture, trade, and real estate sectors have led to debt repayments and recoveries.