Foreign investor interest plays major role in NSE performance in 2013

Home Africa chairman Lee Karuri speaks during the bell ringing ceremony which marked the company’s debut on the NSE Growth Enterprise Market Segment (GEMS) at the Stanley Hotel on July 15, 2013. PHOTO/SALATON NJAU 

In Summary

• The rally has been fuelled chiefly by persistent foreign investor interest, dropping interest rates, and favourable economic conditions in the country.
• The acquisition will help the firm expand its footprint to Tanzania and Southern Africa, where Real Insurance has operations.
• Investors are bullish that the firm will now manage funds mobilised through its life business

By Rufus M. Mwanyasi
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The Nairobi Securities Exchange (NSE) 20 Share Index closed at an enviable 18.53 per cent as at 28 December, ending at 4,886.52 points

The rally has been fuelled chiefly by persistent foreign investor interest, dropping interest rates, and favourable economic conditions in the country.

The quarter ending September 2013 saw the total listings go up to 61 following that of Home Afrika, a real estate developer that joined the market by way of introduction.

The firm listed 405 million shares on the NSE’s Growth Enterprise Market Segment (GEMS). Year-end market capitalisation stood at Sh1.9 trillion.

PAN-AFRICAN STRATEGY

Centum Investment Company becomes the leading stock for the year 2013 after bagging a whopping 168.6 per cent return.

The market looks to have rallied behind its pan-Africa expansion strategy.

The investment firm has been in an acquisition mode following its 2010 decision to freeze dividend payments for five years and use the funds to pursue new investments.

The firm posted a 10.7 per cent growth in net income in the six-month period that ended in September supported by growth in investment income. The stock closed at Sh32.5.

British American Investment Company easily settled in the second position after returning 148.31 per cent for the year.

The financial services firm benefited from an agreement to purchase Real Insurance, which swayed investors in the right direction.

The acquisition will help the firm expand its footprint to Tanzania and Southern Africa, where Real Insurance has operations.

The business will now account for 7.46 per cent of the gross written premiums based on the 2012 results of both companies.

CFC Insurance and Pan Africa Insurance came third and fourth, with each gaining 123.88 per cent and 120 per cent respectively.

The former rallied on the successful demerger from CFC Stanbic group, which has given it great focus.

Recent acquisition of Sanlam Investment by Pan Africa appears to have sent the right signals in the market.

MANAGEMENT FEES

Investors are bullish that the firm will now manage funds mobilised through its life business while also boosting its revenues by charging management fees.

KenolKobil becomes the second worst performing company with total losses of 30.88 per cent despite reporting a half-year profit of Sh147 million, up from a historic Sh3.9 billion loss in a similar period last year.

It is likely that its credit rating downgrade and investors’ disappointment with the failed PUMA deal may have put a drag on its performance.