NSE shares dive despite higher corporate half-year earnings

Nairobi Securities Exchange (NSE) on the trading floor at the Exchange building in Nairobi on August 26, 2020. PHOTO | SALATON NJAU | NMG 

By CHARLES MWANIKI More by this Author

Stock prices continued to retreat on Wednesday despite higher earnings reported by key bank stocks for the half-year to June period, reflecting the effects of foreign investors selling on large counters.

The bourse has shed a total of Sh103.8 billion in investor wealth in the past one week, largely on retreating share prices of large banks and Safaricom.

Bank stocks, which are normally sensitive to industry performance, have failed to appreciate despite some reporting record half-year profits which bodes well for end-of-year dividend earnings for shareholders.

Equity Group, which on Tuesday reported a 35 percent jump in net profit to Sh23.7 billion for the half-year period, saw its share price fall by 0.7 percent or 35 cents to close at Sh48 on Wednesday.

Last week, Standard Chartered Bank Kenya also reported a double-digit rise in earnings, growing its net profit for the period by 10.9 percent to Sh5.4 billion. Its share price, which fell by 4.3 percent to Sh133.75 on the day it released its results, stood at 136.75 at the close of trading on Wednesday

KCB Group and DTB also released their half-year results after the market closed yesterday, reporting jumps of 28.4 percent and 25.6 percent in net profit respectively to Sh19.6 billion and Sh3.96 billion.

Higher dividends paid by banks last year combined with low share prices have meant that dividend yields have gone up to a range of six percent and 14 percent, rivaling the rates on offer in risk-free government securities.

Safaricom, which remains the most profitable company in Kenya reported a net profit of Sh67.49 billion for the year ended March 2022 and has seen its share price oscillating in recent weeks.

on Wednesday, the telco’s stock shed 2.3 percent to close at Sh29.10 per share, pointing to some profit taking on what is the NSE’s most liquid counter.

The weight carried by these large banks and the telco on the bourse means that despite 24 stocks out of the 65 listed at the NSE gaining on Wednesday, the market still shed Sh28.3 billion in investor wealth. Safaricom accounted for most of the paper losses at Sh28.04 billion.

cmwaniki@ke.nationmedia.com