Stock market hit by fears of Omicron strain of Coronavirus
Recovery in shareholder wealth at the Nairobi Securities Exchange (NSE), which started early this year on a high is now being threatened by the advent of the Omicron strain of Coronavirus that has seen foreign investors turn to net sellers.
Since the beginning of 2021 up to September, the bourse witnessed a resurgence as investors recouped their losses following a Covid-19 rout that eroded shareholder value to January 2021.
The performance of NSE, however, gathered momentum from March to peak in September on gains fronted by Safaricom and the financial sector.
Recovery in shareholder wealth was largely driven by the banking sector with Equity Bank, and KCB leading the finance sector as Safaricom consolidate gains.
EABL also benefited from the winding down of the Covid-19 containment measures.
Safaricom rose on news of Ethiopia entry and solid M-Pesa data helped by rising data sales across several urban centres in Kenya.
The telco’s share price has been on an growth trajectory hitting highs of Sh44.90 — a new all-time high.
In August Safaricom clocked a market capitalisation of Sh1.798 trillion, which is equivalent to 61.6 per cent of the NSE wealth.
This was helped by expectations of the Sh36.86 billion dividends at the end of the month.
Commercial banks have also seen a rise on their stocks after the first half results sent the clearest indication that the sector has come out of the Covid-19 downturn, heralding a resumption of dividends for shareholders.
Data by the Central Bank showed that commercial banks’ six-month profits before tax jumped 61 per cent to Sh96.4 billion, a performance that has deepened investors’ interest.
However, the manufacturing stocks failed to recover from the virus as they could not quickly re-engineer their operations to avoid the effects of the Covid-19 containment measures.
Agricultural stocks had mixed performance with the likes of Sasini and Kakuzi rising but others failed to recover from the disaster as their exports suffered low demand abroad.
However, this recovery is again under threat after the value of stocks on NSE dropped to a seven-month low last week on fears of a resurgence of Omicron strain.
The drop was driven foreign investors’ sell-off attractive counters such as Safaricom.