Safaricom stock sheds Sh62bn, sharpest one day drop in months

Money Markets

Brokers on the trading floor of the Nairobi Securities Exchange. PHOTO | FILE 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• Safaricom stock’s capitalisation fell to Sh737.2 billion from Friday’s Sh799.3 billion.
• At Sh18.40, the company’s share price is still 15.4 per cent lower than its historically highest price of Sh21.75 which was struck late last month.

Safaricom stock on Monday shed Sh62.1 billion in the sharpest single-day drop for months as it started trading ex-dividend.

The average price a share fell by 7.5 per cent to Sh18.40 compared to last Friday’s price of Sh19.95. The largest bourse stock’s capitalisation fell to Sh737.2 billion from Friday’s Sh799.3 billion.

The price had risen as foreign investors trooped to the Nairobi bourse to buy the share, raising demand as supply remained constrained.

The telco has declared a special dividend of 68 cents and the annual dividend of 76 cents, totalling Sh1.44 a share — the highest-ever payment it has given investors in a single year. Both dividends are payable on December 1, but books closed last Friday.

“The Safaricom dividends and improved prospects for the company has been attracting foreign investors into the company. So they want to reap the dividends that will be paid,” said Paul Mwai, chief executive of Nairobi-based brokerage firm AIB Capital, in an interview last week.

At Sh18.40, the company’s share price is still 15.4 per cent lower than its historically highest price of Sh21.75 which was struck late last month.

On Monday, it traded a total of 5.36 million shares at a low of Sh18 and a high of Sh19.00 – averaging Sh18.40 on a volume-weighted basis.

Foreign investors returned to the bourse in a big way last month, with most of the inflows, amounting to Sh2.3 billion, buying into Safaricom shares.

The total overseas net portfolio investment in the companies listed on the Nairobi Securities Exchange (NSE) amounted to Sh3.7 billion or nearly four times the Sh978 million posted in July. In August last year, net overseas inflows stood at Sh914 million.

READ: Safaricom dividend plan spurs foreign inflows at NSE in Aug

Net inflows have ranged between Sh300 million and Sh900 million a month this year, with last month recording the highest amount.

On Monday, the NSE 20 Share Index fell by 16.59 points to stand at 3171.28 partly thanks to Safaricom. Foreigners accounted for most of the trading.

“Foreign investors assumed a net buying position by accounting for 82.7 per cent of total market purchases and 73.5 per cent of total market sales,” said Dyer and Blair Investment Bank in an update on Monday’s trading.

The banking sector was the most active as it had 65.91 per cent of the day’s traded volume. Equity Group Holdings was the day’s largest mover with 15 million shares trading at an unchanged average price of Sh26.50.