NSE crosses 5,000 points helped by Safaricom price surge

A trader at the Nairobi Securities Exchange. The NSE 20-Share Index crossed 5,000 points mark. Photo/FILE 

By GEORGE NGIGI

In Summary

• The new price level is a 2.5 per cent gain from the first day of trading in the New Year, underlining investors’ high appetite for NSE stocks.
• Investor’s wealth—which is measured by market capitalisation—rose to Sh1.972 trillion with Safaricom being the main driver after it touched a new record high of Sh11.65 per unit during trading Wednesday.

The NSE 20-Share Index crossed the 5,000 points mark for the first time this year, reflecting bullish investor outlook in a week when the IMF managing director Christine Lagarde toured the country ahead of planned negotiations for a fresh loan.

READ: IMF chief’s visit turns international focus on Kenya

The index, which tracks changes in prices of 20 select stocks at the Nairobi Securities Exchange, rose by 17.81 points in Wednesday’s trading to close at 5,010.93 points.

It is the third time in the past 12 months that the NSE 20-Share Index has crossed the 5,000 points benchmark, having touched the level in April and November last year.

The new price level is a 2.5 per cent gain from the first day of trading in the New Year, underlining investors’ high appetite for NSE stocks.

“Foreign investor activity gained root with foreign buys edging up by 50 per cent to Sh270 million, while foreign sales edged up by slightly over 100 per cent to record a turnover of Sh209 million,” said Sterling Research in a note to clients.

Investor’s wealth—which is measured by market capitalisation—rose to Sh1.972 trillion with Safaricom being the main driver after it touched a new record high of Sh11.65 per unit during trading Wednesday.

Kenya Power which got a substantive CEO Dr Ben Chumo appointed Wednesday also went up by 2.8 per cent to close at Sh14.50 per share. The counter was also buoyed by reports that it had received significant debt financing that could result in a temporary shelving of a planned corporate bond or Eurobond issue.

Sameer Africa was also on the rise with analysts at Standard Investment Bank attributing the upward movement to speculation on the entry of a new strategic investor in the tyre-making company.

“Sameer climbed 6.2 per cent on speculative interest ahead of the entry of new strategic investors and exit of Bridgestone from the company,” reads a report from the investment bank.

The Kenyan stock market was a big hit last year closing among the top three best performing markets in Africa with an average return of 19 per cent. Ease of entering and exiting the market makes it attractive to foreigners.

On the losing side was Car & General which shed of 7.4 per cent. The drop was attributed to demolition of three-wheeler tuk-tuk auto stages in Mombasa and the pulling down of the company’s billboards in the same town. The company is the leading retailer of tuk-tuks in the country.

Other losers included East African Portland Cement whose boardroom wars have now spilled into the courts. The counter closed at Sh62.50 down from the previous day’s Sh65.