Big cap stocks could rise as investors shift cash to Nairobi

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The market was abuzz with talk that Qatar National Bank was in the lead to purchase Chase Bank. QNB holds a meaningful chunk of Ecobank shares. They have established their sub-Saharan bona fides severally, but I would have thought they would have to consider that Chase gives them mono-country exposure compared to Ecobank.

I expect big cap stocks to pop higher in a meaningful way as SSA investors recalibrate in favour of Nairobi when Lagos gets ejected from the MSCI Frontier Index (because of the lack of convertibility in the naira). The official closing prices have not been received as I file this. Safaricom set a fresh 2016 closing high and BRITAM EA reported a full year loss after tax of Sh1.009 billion.

Commercial and Services

Safaricom closed at Sh17.30, a rise of 0.58 per cent on good volume action of Sh21.152 million shares worth Sh366.261 million. Buyers are set to push the price higher and are outpacing sellers by a two-one margin. Safaricom is +6.13 per cent this year considerably outperforming the benchmark indices, and that outperformance is set to stretch in the run-up to the earnings release. My price target for this year is Sh22.50.

Banks

Britam reported a full year loss. Earnings were crimped by a Sh2.8 billion loss on financial assets at fair value versus 2014’s gain of Sh4.1 billion. The company’s gross earned premiums grew by 38 per cent to Sh20.3 billion but was offset by 32 per cent increase in net claims and benefits to Sh10.6 billion. The group’s net loss ratio contracted by 200bps. Britam reported a full year earnings per share of -0.50cents a share and maintained the dividend at 30 cents a share. Britam has evidently taken a big mark-down on its listed portfolio, but should claw most of this back this year. These results were in fact better than consensus estimates. Britam of course endured a lot of drama in 2015 with its biggest shareholder (at the start of 2015) the flamboyant Dawood Rawaat being ousted from the shareholder register. Britam firmed +1.3 per cent to close at Sh11.70 and traded Sh1.449 million shares. It is -10.00 per cent in 2016.

Big-cap-stocks-could-rise-as-investors-shift-cash-to-Nairobi

I&M eased -0.93 per cent to close at 106.00 and traded 56,700 shares.
Kenya Commercial Bank edged -0.58 per cent off a 2016 closing high to close at Sh42.50 and traded 604,300 shares.
Standard Chartered firmed +0.4 per cent

Asmaa Mubita is a Kenyan journalist of international repute with over fifteen years of experience in broadcast journalism. Asmaa Mubita began his journalism career at the Kenyan state broadcaster (KBC) and later worked at the KTN owned by the Standard Group and Citizen Television, the flagship brand of Royal Media Services. These exploits together with his reporting experience with the Voice of America, CNN and BBC have been rewarded with local and global recognition.