Market News

Large caps tighten grip on bourse in quarter three

Capital Markets Authority CEO Paul Muthaura. FILE PHOTO | NMG
Capital Markets Authority CEO Paul Muthaura. FILE PHOTO | NMG 

The wealth of investors at the Nairobi bourse continued to be concentrated in five blue-chips in the quarter ended September, underlining the struggle by the regulator to attract large firms.

Safaricom #ticker:SCOM, East African Breweries #ticker:EABL, Equity #ticker:EQTY, KCB #ticker:KCB and British American Tobacco (BAT) Kenya #ticker:BAT marginally increased their share at the Nairobi Securities Exchange to an average of 65.88 per cent from 65.67 per cent.

The five accounted for Sh1.584 trillion of the market capitalisation, Sh202.51 billion more compared to the April-June period, according to the Capital Markets Authority’s (CMA) latest quarterly bulletin released last week.

The market cap grew by Sh300.70 billion or 14.29 per cent to Sh2.404 trillion in the review period despite heightened poll jitters, largely driven by renewed interest by institutional investors.

CMA chief executive Paul Muthaura has backed Global Depository Receipts (GDRs) rules, which were effected on July 13, to help attract large multinationals operating in Africa to Nairobi and reduce the concentration risk.

GDRs provides a lower-cost route for international companies to trade shares on a bourse without having to physically list.

“With introduction of the GDRs, we are hoping that we will allow large companies that are operating on the African continent to cross-list into Kenya or to do their primary listing using the GDR framework because it is slightly easier than doing a full local listing,” Mr Muthaura said in an earlier interview.

Safaricom accounted for an average 41.5 per cent of the NSE wealth, a slight rise from 40.78 per cent three months earlier.

The share of EABL in the quarter reduced to 8.48 from 9.15 per cent, Equity’s to 6.45 from 6.50 per cent while KCB and BAT rose to 5.39 and 4.05 per cent, respectively, from 5.30 and 3.94 per cent.

“Safaricom is the ‘’elephant in the room’’ when it comes to the NSE, and we have to focus on building more Safaricoms,” investment analyst Aly-Khan Satchu, who runs Rich Management, said in a past interview.