Safaricom share price dives below Sh30, sending NSE into spin
Safaricom's share price dived below Sh30 a share for the first time since 2020 sending the entire NSE down with it as the selloff by foreign investors persisted.
The stock which recently traded at a high of Sh44 a share sunk to Sh26.50 yesterday, a further 4.68 dip from last Friday, despite having announced favourable results last week.
Safaricom posted Sh67.5 billion in after-tax profit for the financial year ended March 2022, with earnings from M-Pesa crossing the Sh100 billion mark for the first time.
The dip in the telco’s share prices saw the NSE go to near pandemic levels of 2020, signalling rising selling pressure from international investors.
“Equities turnover at the NSE fell 19 per cent in 2022 on the decline in foreign investor appetite for shares. We expect this to persist. A hike in lending rates in developed markets has made their investments more attractive, coupled with the risk associated with the Kenya elections,” AIB-AXYS Africa told Business Hub.
Foreign investors control over 65 per cent of the trades on the NSE while local investors are mostly retail investors who do not have the volumes to move the market.
International investors are selling their assets in developing markets due to concerns over a global financial recession.
The NSE had shed Sh294 billion in a month. The market capitalisation dropped to Sh2.176 trillion on Friday after a steady fall that started on April 13 when the bourse’s value stood at 2.471 trillion.
Safaricom, East Africa Breweries Ltd, Cooperative, Equity and KCB Group have been the largest losers on the NSE since they are the most preferred by foreign investors. Some investors think the Ethiopia project will dent the price of the stock.
“These investments will dent the returns from Safaricom for the next 3 years. The stock can at best remain stable with no price gains. It has room to fall further to 25 shillings. With a 5 per cent dividend yield, I am okay with holding Government paper with a yield of 13.9 per cent,” said Hay Owiti, a stock market investor.