This year, corporate governance issues have come to the fore in the market.
Investors were quick to punish a stock whenever questions were raised about dubious management practices.
The top 10 worst performing stocks are representative of companies that have fallen upon hard times both in the C-suite and on their books.
2018 has been a rough year for investors at the Nairobi Securities Exchange (NSE) #ticker:nse, with stocks offering capital gains proving hard to come by.
Market data shows that only seven stocks were in the black in the year-to-date by close of trading on December 21, with 53 having shed value during a year of a bear run that hit the market in spite of the improving economy and political calm following the rapprochement between President Uhuru Kenyatta and opposition leader Raila Odinga in March.
This year, corporate governance issues have come to the fore in the market, with investors quick to punish a stock whenever questions were raised about dubious management practices.
Financially underperforming companies have also fallen victim of negative investor sentiment, with investors proving sensitive to the prospects of no dividend pay-outs at a time when capital gains have dried up on many stocks.
The top 10 worst performing stocks, all of which have shed at least half of their value at the market this year, are representative of companies that have fallen upon hard times both in the C-suite and on their books.
Wiped out
The worst performing stock this year is Deacons East Africa #ticker:DCON, whose value has nearly been wiped out at -87.1 per cent.
Financial difficulties have forced the fashion retailer to go into administration, and subsequently the stock has been suspended from trading at the NSE with a last trading price of just 45 cents. It had opened the year at Sh3.50.
Kenya Orchards #ticker:ORCH has shed 85.6 per cent, going down from Sh97 a share in January to Sh14 on December 21. The stock fell victim to a little known rule in the NSE on September 18, which states that companies lose their daily price movement protection of 10 per cent if they have not traded for three continuous months.
“NSE daily trading rules indicate that the daily price movement for any equity security in a single trading session shall not be more than 10 per cent of the equity reference price. However, this does not apply for a security that has not traded for over three calendar months, as was the case for Kenya Orchards,” said the CMA in their quarter three market soundness report.
Uchumi #ticker:UCHM, which has been beset by financial problems that have seen it delay reporting its financial results for the year ending June 2018 by seven months, has shed 83.7 per cent of its value, dropping to 75 cents from Sh4.60 in January.
The cash strapped retailer was supposed to have released the results by October as required by the Capital Markets Authority (CMA) regulations but is now blaming its deep financial woes for the delay.
Other significant losers include Nairobi Business Ventures #ticker:NBV (-65.7 per cent to Sh1.15) and Kenya Power #ticker:KPLC (-62.6 per cent to Sh3.40).
The power firm has been beset by corporate governance troubles, with two of its former CEOs and other top management staff in court on corruption charges.
Eveready East Africa #ticker:EVRD, East Africa Cables #ticker:CABL, ARM Cement #ticker:ARM, Kenya Airways #ticker:KQ and Home Afrika #ticker:HAFR round off the rest of the top 10 losers list, with share price declines of 57.8, 57.3, 55.4 and 51.9 per cent respectively this year.
ARM is currently suspended from trading after falling into administration.
Gainers
On the gainers list, firms that have been the subject of takeover bids top in share price appreciation.
Express Kenya #ticker:XPRS, whose chief executive Hector Diniz lodged an unsuccessful takeover bid earlier this year, leads with a gain of 48 per cent, from Sh3.75 to Sh5.55 a share.
The bid failed after he was unable to garner support of shareholders holding a minimum combined stake of 75 per cent.
KenolKobil #ticker:KENO is second with a gain of 40 per cent to Sh19.60. the oil marketer is currently the subject of a takeover bid by French firm Rubis Energie, which has offered existing shareholders Sh23 a share for their stake.
Unga Group #ticker:UNGA, which like Express was the subject of a failed bid by US conglomerate Seaboard Corporation—which is a shareholder in the firm— has gained 35.5 per cent this year to Sh39.30, mostly due to the price rally during the offer period.
The only other companies with a positive movement in price this year are Barclays Kenya #ticker:BBK, up 16.1 per cent to Sh11.90, Total Kenya #ticker:TOTL at 13.8 per cent to Sh26.75, Kapchorua Tea #ticker:KAPC at 13 per cent to Sh74 and Stanbic Holdings #ticker:CFC at 9.3 per cent to Sh88.50.
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Note: The results are not exact but very close to the actual.
