Foreigners sell KCB stakes over three months

Money Markets

Customers at a KCB branch in Nairobi. Foreign investors have cut their stake in the lender in what is attributed to profit taking and price of unit. PHOTO | FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• The CMA statistical bulletin shows at the end of June, foreigners held 831.9 million shares of Kenya’s largest bank by assets, down from 1.43 billion shares at the end of March.
• Their total holdings fell from 47.8 per cent to 27.9 per cent during the quarter, leaving the bank that was edging towards majority foreign ownership firmly in local investors’ hands.

The proportion of Kenya Commercial Bank shares held by foreign investors fell by 19.9 percentage points in the second quarter of the year according to fresh Capital Markets Authority (CMA) data.

 

The CMA statistical bulletin shows at the end of June, foreigners held 831.9 million shares of Kenya’s largest bank by assets, down from 1.43 billion shares at the end of March. Their total holdings fell from 47.8 per cent of the whole to 27.9 per cent during the quarter, leaving the bank that was edging towards majority foreign ownership firmly in local investors’ hands.

CMA’s data shows local institutional investors were the biggest beneficiaries of the reduced position of foreigners in the bank, rising 86 per cent from 731.8 million shares in March to 1.36 billion in June.

The local institutions now hold 45.6 per cent of KCB’s 2.98 billion issued shares from 24.5 per cent in March.

“From the price rally of the past year, there is an aspect of profit-taking as well as the share having been deemed expensive in valuation, although from the first-half results this has been shown not to be the case with a price to earnings ratio of around 10 against the sector’s 11.5,” said Kestrel Capital analyst Kuria Kamau.

READ: KCB first-half pre-tax profit rises 16 pct, bad debts grow

The changes in KCB’s foreign investor holdings have come against lack of any major spike in foreign investor interest in other stocks, pointing to markets diversification by this class of investors.

Other major counters that normally attract large foreign inflows such as Safaricom, Equity Bank and EABL saw much smaller changes in foreign holdings in the second quarter.

Institutional investors such as pension funds and fund managers who have taken up the KCB shares have been looking more favourably at equities as an investment option due to the high returns.

Pension funds in particular have increased their exposure to equities following rules that limited the amount they could invest in other sectors such as real estate.

The 2013 industry report from the Retirement Benefits Authority shows that the pension funds held Sh23 billion worth of KCB shares by December, the biggest single stock they have invested in.

In the past 12 months, KCB share price has risen 26 per cent to stand at Sh54. In the past three months, however, the bank has gained 10 per cent.

KCB, which for the first five months of the year was the largest lender by capitalisation, is now second with a value of Sh161 billion to Equity’s Sh167 billion.