Stock exchange sees KSh. 18bn increase in investor wealth

Investor wealth at the Nairobi Stock Exchange shot up by KSh. 18 billion in Monday’s trading in a session that pronounced yet another day of high foreign investor demand that pushed prime stocks to new highs.

The Nairobi Securities Exchange (NSE) saw an increase in capitalisation which went up from KSh. 1.326 trillion from the previous day’s KSh. 1.308 trillion.

The main drivers of the market continued to be foreign investors who accounted for 55 per cent of Tuesday’s trading.

Johnson Nderi, a research analyst at Suntra Investment Bank, said that foreign investors were bullish on key stocks and were willing to buy them at the existing prices. He added that foreigners were underwriting the market which helped sustain the high prices.

Stocks of Safaricom, Standard Chartered, BAT, East African Breweries Limited (EABL), and Athi River Mining continued their share appreciation which helped the NSE 20-Share Index to move closer to the 4,300 point mark. The NSE 20-Share Index closed at 4,247.74 points on Tuesday which was up from Monday by 35.26 points.

BAT share prices touched another 52-week high at KSh. 510, EABL also touched a new high at KSh. 295, while Safaricom was KSh. 5.85, Standard Chartered at KSh. 242, and Athi River Mining was at KSh. 52.

Safaricom which closed at an average of KSh. 5.60 saw a 4.67 per cent increase from KSh. 5.35 while its market capitalisation increased by KSh. 10 billion from KSh. 214 billion to KSh. 224 billion.

More than half of the KSh. 18 billion total increase in investor wealth was on account of the foreign demand on the telecoms’ stock. Moses Waireri, a research analyst at Genghis Capital was of the opinion that the rising stocks such as BAT, Safaricom, and EABL were driven by foreign investors.

He also said that the extended gains could indicate that buyers expect a smooth transition in the forthcoming General Election which is normally expected to have a negative effect on the stock market.

A peaceful hand-over of power would influence flows into the NSE that would signify a wider economic performance. Such inflows would broaden the NSE’s strong performance of 2012 that made it one of the highest performing stock exchanges in the world.

The NSE 20-Share Index gained 28.95 per cent in 2012 and closed at 4,133.02 points as compared to 3,205.02 points in 2011.

Source : Kuzabiashara