Blue chip companies end June with market cap losses

The peaceful conclusion of the March 4 poll has been the main catalyst at driving activity at the Nairobi Securities Exchange. FILE 

By CHARLES MWANIKI

Only two of the 20 biggest companies (by market value) at the Nairobi Securities Exchange registered growth in capitalisation in June as the bourse capped a difficult month that saw overall investor wealth drop by over Sh100 billion.

The NSE 20-Share Index lost 8.2 per cent in value in June, closing the month at 4,598 points, compared to the 5,006 points at the end of May.

Analysts said the market suffered from multiple hits occasioned by a price correction, profit taking and a reaction to the tightening of fiscal stimulus by the US government that caused global markets correction.

The cautious approach by foreign investors especially culminated in the lowest foreign weekly inflows being recorded in the last week of June.

(Read: Kenyans’ foreign share ownership rises to Sh26bn)

Foreign inflows dropped to the low of $1.65 million (Sh140.2 million) in the trading week of June 24-28, a drop of 77 per cent compared to the previous week’s inflows of $7.05 million (Sh600 million).

“When international markets correct, investors will generally take a cautious view on all markets,” said Kestrel Capital managing director Andre DeSimone. The threat of capital gains tax following the tabling of the national budget added to the jitters affecting investors, although the Treasury moved later to clarify that the tax would not initially affect equities.

Investor wealth at the NSE had grown by Sh118 billion in May, with the market capping the month with a valuation of Sh1.72 trillion-a record high-helped by a bullish run that has lifted valuation of blue chip stocks to record prices. In June however, these gains were wiped off by falling stocks, with the market cap at the end of the month falling to Sh1.62 trillion.

(Read: Treasury strikes NSE ownership deal with brokers)

The top companies in the NSE all lost value, with EABL Limited, the biggest company by valuation, dropping 9.3 per cent in price to close June at Sh333 per share, and saw its market cap drop to Sh263 billion, down from Sh295 billion at the end of May.

The stock had gained 20.3 per cent in May to stand out as the second biggest gainer after Olympia Capital (21 per cent).

Safaricom Limited shed 9.7 per cent in price in June compared to a 5.8 per cent gain in May, while Equity Bank, the third biggest company at the NSE, shed 13.2 per cent to reverse the 15.2 per cent gains achieved in May.

Of the top 20 companies by capitalisation, only Diamond Trust Bank and CFC Stanbic registered gains in prices in June, marginally at 2.4 per cent and 1.6 per cent respectively.

On the other hand, the month’s top loser Liberty Holdings saw its price drop by 22 per cent to Sh9.95 per share, with Kenol-Kobil following with 16.2 per cent erosion in price top close the month out at Sh8.80.

Jubilee Holdings also lost significant value, closing the month 14.4 per cent down at Sh225.