September looked as the official Nairobi Securities Exchange bull kick-off; well it was indeed a bull market. The NSE 20 share index went above 5,200 points, after staying below this level for over three years. The NSE self listing was done, which had over 600% oversubscription and, as one would expect, made demand for the shares at the bourse shoot to high levels. Having had its debut at Sh9.50, it now ranges between Sh24.50 and Sh27.50.
Several stocks touched their all-time highs including Centum Investments Ltd, NIC Bank, Britam, Equity Bank and NSE. Others that rose significantly were HFCK and CIC Insurance Ltd. With the press release that a consortium lead by Centum had won the coal mining tender at Kwale and Kitui, investors quickly began to take position in the Centum stock, making it gain significantly to Sh84.50 as its highest point from Sh60 at the beginning of the month.
Equally, this firm has continually been in the news with several deals signed such as acquisition of a stake at K-Rep Bank, among others. Others that rose were HCFK and Britam after news of acquisition of significant stake in HFCK by Britam and also respective executive management of the two institutions increasing their shareholding in the organisations.
Moreover, NIC Bank finally had its bond listing at NSE and announced that it was seeking its shareholders for additional capital through rights issue in October 2014. This made its stock to rise to a new high of Sh84.00 as investors sought to buy additional shares to enjoy or trade the allocated rights. Further, CIC Insurance announced that it was seeking funds through
corporate bond at 13% rate of return for investors, which is viewed as above market rate given that risk-free rate currently ranges between 8- 9%. This pushed the CIC stock at bourse upwards with an oversubscription looming.
Equity bank had its telecommunication subsidiary, Finserve Ltd, formally allowed to roll out its thin SIM technology. This is seen as a rival to Safaricom M-Pesa platform. The backing of Central Bank and Communications Authority may have driven investors to build confidence in Equity stock and as such driving its demandand value to Sh60.00, which has its highest.
Among the losers were Mumias Sugar Company, Bamburi Cement, Safaricom and Nation Media Group (NMG). While Bamburi and NMG lost ground due to books closure for dividend for which investors who had bought the shares sold out to take in dividend, the rest of the stocks lost due to other reasons. Mumias Sugar released its full-year results, which showed loss of 2.7 billion despite increase in cane production and ethanol sales and a drop in electricity sales.
This pushed the stock to touch an all-time low of Sh1.85; a price per share not witnessed in the recent past. Further, the company issued a statement of firing about 900 employees. That notwithstanding, it remains a stock to watch.
Safaricom stock may have lost ground due to the Equity’s Finserve award to carry on thin sim technology, which is said to lower transaction charges for money transfer and could dent Safaricom’s M-Pesa revenues. Further, it closed its books for dividends payment to its shareholders.
October is likely to be a pick-up month from where September ended; investors are very liquid from refunds from oversubscription of DTB’s rights, NSE IPO, Britam bond, UAP bond and NIC bond. That explains why other organisations such as CIC Insurance, NIC Bank and Funguo Investments Ltd are in the market to source for capital. While that is the case, the market will remain bullish till the liquidity levels are lowered and the capital gains tax which was recently signed is applied.
— Written by Martin Irungu; Investments Officer at Funguo Investments limited. ”
