Capital Markets

Safaricom share sheds Sh124bn in 8 days at NSE

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Summary

  • The share closed Monday trading at Sh35.90— a Sh3.10 drop from the all-time high of Sh39 that was sustained for three consecutive days to last Wednesday following the announcement of a surprise interim dividend.
  • Safaricom share had dropped to Sh37.30 last Thursday, when the telco closed the shareholders’ register ahead of payment of Sh0.45 per share interim dividend amounting to Sh18 billion by the end of the month.

The Safaricom #ticker:SCOM share has shed Sh124.2 billion in the last eight days of trading on price correction, pulling down the market value of the Nairobi bourse to a one-month low.

The share closed Monday trading at Sh35.90— a Sh3.10 drop from the all-time high of Sh39 that was sustained for three consecutive days to last Wednesday following the announcement of a surprise interim dividend.

Safaricom share had dropped to Sh37.30 last Thursday, when the telco closed the shareholders’ register ahead of payment of Sh0.45 per share interim dividend amounting to Sh18 billion by the end of the month.

Head of research at Genghis Capital, Churchil Ogutu said the rally in the share had been triggered by the announcement of the first ever interim dividend but the price is now correcting itself after the dividend books closure.

“Most investors were looking at that interim dividend and that had propelled the rally. The share was expected to start coming down post book-closure date,” said Mr Ogutu.

“Also, with the clarity that the Ethiopian licence is still to be decided, the price is now correcting itself in the absence of another key factor to trigger a rise.”

The fall in Safaricom value to Sh1.438 trillion has pulled down the Nairobi Securities Exchange (NSE) market capitalisation to a one-month low of Sh2.24 trillion from Sh2.548 trillion when the telco’s share price hit the peak.

Safaricom accounted for 59.28 percent of NSE wealth at the close of trading yesterday, down from 61.4 percent on February 25, retaining significance influence on the direction of the market. The companies’ outsized influence on key market indicators has made it difficult for investors to measure the true performance of the bourse.

Foreign investors were accumulating Safaricom shares heavily in three weeks to the dividend announcement but they started reversing that trend last week, Genghis analyst said.

Yesterday, volumes of foreign sales at Safaricom were 295.6 million in contrast with 198.65 million foreign buys.

Safaricom’s share rally has also been linked to the Central Bank of Kenya’s move in December to end free M-Pesa transactions of up to Sh1,000.