NSE in first quarter rise as Banks, Safaricom run the show

The Nairobi Securities Exchange (NSE) has registered a Sh320 billion growth in investors’ wealth in the first three months of the year, supported by a good run by banks and Safaricom stocks.

Having closed last year with a market capitalisation of Sh2.5 trillion, most shares have posted gains, increasing investors’ wealth to Sh2.82 trillion at the close of last month.

Research by Cytonn Investment showed that equity turnover during the quarter rose by 73 per cent to $600 million (Sh61.2 billion) from 347.2 million (Sh35.4 billion) in the last quarter of last year.

“This can be attributed to improved investor sentiments as a result of political stability after elections,” noted Cytonn.

Most firms have announced their 2017 performance, with 27 companies having already proposed final dividends in the build-up to annual general meetings.

Banks have recovered from the turmoil of August 2016, following the capping of interest rates and have dominated the chart of top gainers in the year up to the end of last month. Equity Bank, which touched a 12-month high of Sh54, was the top gainer. Its share closed the quarter with a gain of 38.4 per cent since January.

The bank’s Chief Executive James Mwangi said in a recent media briefing that the rise indicated that investors had agreed with his post-rate cap strategy.

The bank grew net earnings by 13.9 per cent as its peers booked reduced profits. “The market seems to have agreed with the strategy. The removal of interest rate caps will only serve as a big bonus,” said Mr Mwangi. Equity’s share gain was followed by Barclays Bank of Kenya with a 31.8.per cent gain. KCB, whose share also touched 12-month high in mid-March, came in third having gained by 24 per cent since January.

Co-operative Bank with a 22.5 per cent gain came in fourth as Safaricom closed the log of top five performers having gained by 15 per cent since the year started.

Market capitalisation

The firm’s share pulled a rally in March, hitting an all-time high of Sh32.25. It has the highest market capitalisation on the NSE.

In the three months to end of the month, all the bank stocks, with the exception of Housing Finance, have booked gains in share prices.

All the remaining 10 banks have posted double-digit percentage gains in share prices, with some stocks touching 12-month high.

During the quarter, stocks of firms with large market capitalisation such as Safaricom registered gains, sending the NSE All Share Index (NASI) NSE 20 and the NSE 25 Share Index into the green.

In the last three months, the NASI gained 11.7 per cent to close the month at 191.23. The index had hit an all-time high of 192.17 points during the close of the third week of last month.

The NSE 20 Share Index gained by 3.6 per cent while NSE 25 Index gained by 9.6 per cent.

Rich Management Chief Executive Aly-Khan Satchu said recently that the good performance of bank stocks was triggered by anticipation of the repeal of interest rate caps.

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