The recent rally at the Nairobi Securities Exchange (NSE) that saw blue chip stock prices rally slowed down last week on the back of profit taking by investors, pushing all indices back into the red for the year.
Market data shows that the NSE 20 Share Index is now 0.4 percent down since the beginning of the month, while the NSE All Share and NSE 25 Share indices are down 0.9 and 0.6 percent respectively.
Last week, the three shed between 0.7 and one percent as companies such as Safaricom #ticker:SCOM, Stanbic #ticker:CFC and Bamburi #ticker:BAMB retreated in share price.
“The benchmark indices slid for the second week in a row, on the background of price dips of some large caps,” said Standard Investment Bank in a weekly market report.
“As is often the case, Safaricom was the most traded counter, accounting for 34.6 percent of total turnover. The telco marginally shrank 0.6 percent week on week, mainly on foreign trading, as investors continued to cash in on the high price point.”
The profit-taking investors are cashing in on the huge gains that a number of firms, especially large bank, made in the last quarter of the year as the market reacted positively to the removal of the rate cap on bank loans.
During the last three months of 2019, the NSE 20 share index registered a gain of 9.1 percent.
The NSE All Share Index was up 14.4 percent in that period while the financial service stock-led NSE 25 Share Index was up the highest at 18 percent.
Analysts at Genghis Capital said that although most of the gains as a result of the rate cap removal have been factored into the market, they remain bullish on banking stocks going forward due to the promise of higher earnings.
“Prospects for the banking counters remain optimistic on the back of the removal of interest rate caps though following the bull run witnessed at the NSE in fourth quarter 2019, much of the potential upside has been eroded,” said Genghis in its 2020 equities outlook.