Safaricom market cap hits Sh973b
Safaricom’s share price dipped to a two-year low at the Nairobi Securities Exchange (NSE) as market capitalisation slid below Sh1 trillion on foreign investors dumping local stocks in search of safer assets.
The firm’s stock touched a low of Sh24 per share according to Reuter's data stream, sending its market capitalisation tumbling to Sh973 billion, which is the lowest since June 2020 during the Covid-19 pandemic.
The stock sustained highs of Sh44 per share before hitting Sh30. It however dropped to Sh24 yesterday alerting bargain hunters who may now troop in for an elusive bottom.
“Investors are really trying to catch the bottom of this Safaricom slide with no luck yet,” said Mwango Capital.
Safaricom CEO Peter Ndegwa who bought 895,000 shares at over Sh30 immediately when he assumed leadership has now lost over a quarter of his investment.
The telco has invested heavily in their Ethiopian subsidiary in a mix of equity and debt which analysts say will take long to bear fruit and could affect the company’s stock in the short term.
“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.
Data from the Wallstreet Journal further shows that the selling of the stock started late last year and has been building up to May and the selling seems to be slowing down which could give support to the Priceline. The stock is now range-bound between Sh24 and Sh25.
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.
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.
Since Safaricom’s market cap is about half of the NSE, it has pushed down the NSE market together with it to under Sh2 trillion.
The US and other developed countries are increasing interest rates to fight inflation and in the process making their local assets more attractive.