NSE glows as All-share index reaches new all-time high

Nairobi securities Exchange (NSE)trading floor.17/10/14-BEVERLYNE MUSIKLI

Bank stocks led the show to send Nairobi Securities Exchange (NSE) all share index (NASI) to an all-time high as investors banked on news that interest rate caps could soon be out.

Bank stocks at the Nairobi bourse rallied in a week that saw the counter with the highest market capitalisation - Safaricom - touch an all-time high of Sh32.25.

Friday, the market closed the week with all indices in green as some bank stocks hit 12-months high to help take NASI to an all-time high of 192.17 points.

This is in complete reverse of what happened in 2016 when the cap came into effect sending all bank stocks tumbling. In two trading sessions, they bled about Sh84 billion.  

Banks ran the show last week commanding 60.89 per cent of the week’s traded value even as the NSE 20 index gained 45.39 points to stand at 3847.18. It transacted shares worth Sh4.55 billion.

Equity Group Holdings, which recorded a surprise 14 per cent growth in profitability as its peers registered a dip in earnings, touched a 12-month high of Sh54 before easing back to close the week at Sh52.50 with shares worth Sh2.3 billion transacted.

In the previous week, Kenya Commercial Bank of Kenya (KCB) share also touched a 12-month high of Sh52.00 for three consecutive sessions at the bourse.

Year-to-date, Equity bank share is trading at a price that is 32.08 per cent higher than what it closed last year with. Barclays Bank and Cooperative Bank have also served up mouth-watering capital gains year-to- date.

Aly-Khan Satchu, the CEO of Investment Advisory firm, Rich Management Ltd said the rally is in anticipation to a repeal of rate caps.

“The starting gun for the latest price acceleration was the show-down with the IMF which signalled that it was seeking a quick repeal or modification of the rate cap. This encouraged Buyers to scoop up supply aggressively,” he said in an emailed response.

He thinks that a repeal or modification of the rate cap would juice banks’ earnings. In addition, he says that the rise in indices was also boosted by ceasefire between President Uhuru Kenyatta and Opposition leader Raila Odinga.

“The stock market is feeling the glow from the recent hand-shake between the President and Raila. Money likes reduced political risk and it is reacting to that,” he added.

AVENUES TO MAKE MONEY

Faith Mwangi, a research analyst at Exotix Capital told Weekend Business in a phone interview that the rise could also be due to the financial results being released. She thinks the excitement could be temporary.

ICEA Lion Asset Management Chief Executive Einstein Kihanda said the rise could also be based on the expectations that investors have about the financial results and the fact that banks appear to have found other avenues to make money.

“A lot has to do with the fact that the enactment of the law helped banks transform their businesses. Removal of the caps could therefore come as a boost,” he said.

Both Mr Kihanda and Ms Mwangi agree with Mr Satchu’s assessment that investors are responding to the news that rate caps could be removed and see such decision as a positive trigger for the sector.

 

Business
Premium Financial hardships dampen Easter celebrations among Kenyans
Business
Premium Water PS Korir put on the spot over Sh14m dam land
Business
Premium Looming crisis as top lenders stare at Sh500b in bad loans
Business
Premium Ruto's food security hopes facing storm amid fake fertiliser scam