Kenya: Safaricom rise lifts NSE from its 17-year low

By Patrick Alushula

Safaricom share has gained more than Sh160 billion in valuation in the last five trading sessions to lift the Nairobi bourse from a 17-year low caused by the coronavirus pandemic that has triggered a sell-off by foreign investors.

The share was trading at 28.60 on Friday, up 16.7 percent from Sh24.50 on Wednesday, March 25, when the market was at its low point. It had closed Thursday at Sh28.25 a share.

This translates to a Sh164.27 billion gain in its market capitalisation to Sh1.145 trillion, an equivalent of 54.8 percent of total value of investors’ wealth at the Nairobi Securities Exchange (NSE).

“Investors are beginning to see more value in Safaricom counter during this Covid-19 period. People are likely to call more and use more data, helping keep the company’s earnings up. The waiver of transaction costs on sending Sh1,000 is also likely to hook more people on M-Pesa in the long run,” AIB Capital head of research Sarah Wanga said.

Equity Bank, East African Breweries Limited, Co-operative Bank joined Safaricom in posting gains last week.

The five stocks hold at least 75 percent of total investors’ wealth at the stock market.

Co-operative Bank and Equity gained by a shilling each to close at Sh12.85 and Sh33.85 respectively while EABL added Sh9.25 to close Thursday at Sh149.

NSE 20 index gained by six percent to 1,985.27 points as all share index rose from 124.3 points to 136.68 points.

The gain by Safaricom share saw NSE market capitalisation rise from a 17-year low of 1.899 trillion to close Thursday at Sh2.088 trillion, a gain of Sh189 billion.

New Chief

This means Safaricom accounted for 79.3 percent of the rise in the week the telco ushered in new CEO Peter Ndegwa.

Mr Ndegwa, who started work on Wednesday, participated in a virtual electronic handover from the acting chief executive, Michael Joseph, who now returns to the board as director.

Foreign investors were net-buyers on Safaricom counter on Thursday, data compiled by AIB Capital showed.

Foreigners bought 253.9 million shares in contrast with 231.3 million they sold the same day. This marked the third straight net buying position on the counter.

Safaricom last month closed with net selling of Sh4.18 billion (39.44 million) from foreigners

Net foreign outflows at the NSE amounted to Sh9.2 billion ($86.49 million), a report by SIB, showed.

This article originally appeared in Business Day.