Money Markets
An investor monitors trade at the NSE. PHOTO | FILE | NATION MEDIA GROUP
By CHARLES MWANIKI
In Summary
- If BAT’s market value was shared equally among its 5,021 shareholders, each owner would have Sh15.7 million of shares, while Bamburi’s 3,064 shareholders would have Sh20.1 million worth of shares each.
- BAT share price has risen 37 per cent this year to a high of Sh790 in the past month, leaving each shareholder with an average gain of nearly Sh2 million.
- Bamburi’s share price has on the other hand dipped 21 per cent since January, eating away an average of Sh4 million from each shareholder.
A steady appreciation of stock prices at the Nairobi
Securities Exchange (NSE) has boosted the valuation of a select group of
companies turning them into special counters that would make each
shareholder a multi-millionaire were the total paper wealth distributed
equally among them.
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Cigarette-maker BAT and Bamburi,
a cement firm – with a market capitalisation of Sh79 billion and Sh61.7
billion respectively – top the list of the all-millionaire owners’
club.
If BAT’s market value was shared equally among its
5,021 shareholders, each owner would have Sh15.7 million of shares,
while Bamburi’s 3,064 shareholders would have Sh20.1 million worth of
shares each. Estimates of average value of ownership are deemed to help
shareholders assess potential benefits of investing in a particular
stock.
BAT share price has risen 37 per cent this year to a
high of Sh790 in the past month, leaving each shareholder with an
average gain of nearly Sh2 million. Bamburi’s share price has on the
other hand dipped 21 per cent since January, eating away an average of
Sh4 million from each shareholder.
The reality is, however, that share ownership in
any firm is never distributed evenly and most of the stocks are held by
institutional investors in large blocks.
Market watchers say the reluctance by these
shareholders to trade the stocks has been a factor behind the huge value
gains. High value stocks have been the subject of debate in the capital
markets circles with some analysts arguing that such stocks should be
split to make them affordable to retail investors and increase liquidity
on the counters.
“Such high valuations come when the companies have
few shareholders. However, of importance also is the performance of the
counters, given that profit is the driver of growth for any share
price,” said Robert Bunyi of Mavuno Capital.
Other NSE stocks with high mean valuation per shareholder include CFC Stanbic, which is 75 per cent foreign-owned through Standard Bank of South Africa, EABL with Sh8.7 million and Athi River Mining (ARM) with Sh7.9 million.
Equity Bank stands at position six with a mean value per shareholder of Sh6.8 million. The bank has a total shareholder base of 24,892. Nation Media Group and Diamond Trust Bank
are next in the pecking order with average per capital shareholder
wealth of Sh5.5 million (10,594 shareholders) and Sh5.1 million (11,151
shareholders) respectively.
The top individual local shareholder in Bamburi,
according to regulatory filings on May 31, was Mr Baloobhai Patel with
five million shares worth Sh850 million at current market price.
BAT’s top local shareholders at end of May were
Shantilal Patel and Meghji Shah with 119 million shares valued at Sh94
million at current market rate.
An analysis of share price performance in the
long-term shows that tightly held counters tend to maintain their value
over time, meaning their owners are, to a degree, protected from wild
swings arising from external shocks.
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