Bullish bourse sees trade turnover hit 7-month high

Stockbrokers on the floor of the Nairobi Securities Exchange. FILE PHOTO | NMG 

By CHARLES MWANIKI

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Summary

• Stock investors last month on average traded Sh632.7 million at the market daily, the highest since September 2016 when they were moving Sh803.3 million daily.
• The investors were attracted by rising share valuations raised their activity at the bourse.
• Total market turnover in April stood at Sh11.41 billion with the NSE 20 Share Index ending the month 1.4 per cent higher and the NSE All Share Index 2.1 per cent up.

Daily traded turnover at the stock market picked up to a seven-month high in April as investors attracted by rising share valuations raised their activity at the bourse.

Data compiled by Standard Investment Bank (SIB) shows that investors last month on average traded Sh632.7 million at the market daily, the highest since September 2016 when they were moving Sh803.3 million daily.

Investors traded an average of Sh542.8 million worth of shares daily in March.

Analysts say the tide may be turning for the market that has experienced bearish conditions in the past two years, which in turn discourages trading as investors seek higher returns elsewhere.

“Equities have recorded improvement over recent weeks, a positive sign of a possible turn in the market,” says research firm Stratlink Africa in its May 2017 market update.

“The performance of the bourse has also benefited from exchange rate stability—the shilling held steady against the greenback over the past month.”

Total market turnover in April stood at Sh11.41 billion with the NSE 20 Share Index ending the month 1.4 per cent higher and the NSE All Share Index 2.1 per cent up.
Part of the activity was driven by foreign investors, who during the month recorded net inflow of Sh432.5 million compared to net outflows of Sh306 million in March.

READ: Investors valuations signal eight NSE companies that are ripe takeover targets

Analysts at Cytonn Investments say the market multiples are still attractive for those looking to make an entry, when compared to the historic levels.

“The market is currently trading at a price to earnings (PE) ratio of 10.7 times, versus a historical average of 13.4 times, with a dividend yield of 6.6 per cent versus a historical average of 3.7 per cent,” says Cytonn in its market summary for April.

The bulk of trading activity last month was centred on the large cap counters, with Safaricom accounting for 34.7 per cent of turnover while recording a price gain of 6.9 per cent to Sh19.25. It has since moved above Sh20 ahead of yesterday’s release of improved results.
KCB

and Equity Holdings were the other top movers during the month accounting for 24.3 and 10.9 per cent of total turnover respectively.