The stock market shed Sh65.6 billion in investor wealth in the first two trading sessions this week, pressured by foreign investor sales that have overshadowed the expected price rally ahead of the dividend season.
The NSE’s market capitalisation fell to Sh2.49 trillion on Tuesday from Sh2.56 trillion at the beginning of the trading week.
Safaricom, the biggest company at the bourse by market capitalisation, has shed Sh58 billion in the past two days to drive the downturn at the market.
It closed trading at Sh36.05 per share on Tuesday, down from Sh37.50 at opening on Monday, despite only having 10 days until the March 17 closure of its register for a Sh0.64 per share interim dividend, which will be paid on March 31.
Stocks ideally gain in price ahead of book closures for dividends as investors clamour for a piece of the pie.
Safaricom’s closure, however, comes against the backdrop of a huge selloff in global equities following Russia’s invasion of Ukraine, which has spooked investors into safe-haven investments such as gold, US bonds and the dollar.
Foreigners account for over 55 percent of trading at the Nairobi bourse, despite holding just under 20 percent of issued shares.
By virtue of its position as the NSE’s most valuable and liquid counter, Safaricom accounts for a significant share of foreign trades at the bourse, leaving it more exposed to global market trends compared to its peers.
On Tuesday, the telco saw foreign net sales worth Sh205.6 million on its counter.
Equity Holdings, KCB and EABL, which together with Safaricom account for 80 percent of the market’s total value, have returned a mixed performance this week.
KCB and Equity have shed 2.8 percent and 2.4 percent in share price respectively this week, equivalent to a market cap drop of Sh4 billion and Sh4.7 billion.
EABL on the other hand has managed a slight price increase from Sh156.75 to Sh157.25, adding Sh395.5 million.
The Ukraine conflict, however, remains the biggest cloud-facing frontier and emerging markets, with a strengthening dollar also cutting expected returns down the road for those making exits.
Sanctions imposed on Russia have also raised the price of essential products such as oil and wheat, putting pressure on economies that are just recovering from the Covid-19 hit.
