- Safaricom’s share of combined investor wealth at the Nairobi bourse has hit a high of 58.79 percent rising from 55.94 per cent on October 6.
- The gain comes in a period when other dominant firms like Equity Bank Group, East Africa Breweries Limited, KCB Group and Co-operative Bank shed stock value
While other stocks lost value, and shed Sh19.7 billion, Safaricom reported a steady climb strengthening its share of Nairobi Securities Exchange (NSE) wealth since October 2020.After weeks of steady rise, the telco’ share of combined investor wealth at the Nairobi bourse has hit a high of 58.79 percent rising from 55.94 per cent on October 6. The telco’s share rose by 10.17 percent or Sh3 from October 6 to close trading at Sh32.95, adding Sh120 billion to its market value. In March 2019, it accounted for almost half of the market wealth.
The gain comes in a period when other dominant firms like Equity Bank Group, East Africa Breweries Limited, KCB Group and Co-operative Bank shed stock value. Since October 6, Equity Bank share has lost the most at 5.9 per cent, EABL 5.45 per cent, KCB 5.29 per cent and Co-op Bank 3.03 per cent. The dominance of these five companies, including Safaricom in the Nairobi bourse is a matter of grave concern. As pointed out by The Capital Markets Authority (CMA), these big five have always accounted for more than 75 per cent of the total investor wealth. The dominance of these companies can be a big risk for the Nairobi bourse as the performance of their shares can dictate whether the market goes up or down on any given day. With its major share, a minor fall in the Safaricom share price gives an impression that the market is underperforming despite other stocks recording gains.
CMA’s market soundness report for quarter one 2020 underlines the risk of market concentration within the Kenyan capital markets landscape with the top five companies accounting for 78.2 per cent of all the investors’ wealth at the NSE. One of the factors responsible for the dominance of the five firms is the drought in big-ticket listings at the Nairobi bourse in recent years. Delisting of firms like KenolKobil and erosion in the value of hitherto blue-chip stocks like Kenya Airways and Kenya Power further strengthened the hold by the five firms. The CMA urges for fresh listings of high-value firms to correct the market imbalance at the NSE.
