Safaricom’s rally to an all-time high of Sh31.75 has rewarded its shareholders with a capital gain of Sh90 billion in the past week, and boosted the NSE’s market capitalisation to a new all-time high of Sh2.83 trillion.
The telco opened trading at Sh29.50 last Monday, and by last Friday had gained 7.6 per cent or Sh2.25 after sustained demand from investors hoping for good results for the full year to March 2018.
At Sh31.75 per share, Safaricom’s market value now stands at Sh1.27 trillion, accounting for 45 per cent of the NSE’s total market cap of Sh2.83 trillion.
Analysts say apart from the prospects of higher earnings by the company (which would translate to higher dividends), investors are also looking ahead at possible future gains from new products the telco is introducing into the market.
“Safaricom is a ‘go to stock’ for many investors especially because of its large liquidity. Despite Safaricom trading at a premium to its fair value, investors seem to be pricing in the innovations taking place which offer headroom for the business to grow its top line through data and M-Pesa revenues. There are also possibilities of Safaricom hitting some resistance at that level once buying interest subsides,” said Kingdom Securities senior analyst Mercyline Kyalo.
Foreign investors, who were largely sellers in the first two months of the year as they took profits on Safaricom, have started buying up the stock again in the past week, helping drive up the demand.
The NSE All-Share Index (NASI), climbed to a new all-time high of 192.2 points, with a gains of three per cent in the past one week. The price weighted NSE 20 share index, on the other hand, gained just 0.2 per cent during the week to close at 3847 points.
Other stocks have also been on a gaining streak. Banks such as Equity , KCB , Cooperative , Barclays , NIC and oil marketer Total are trading at two- to four-year highs, in spite of the lenders’ mixed financial performances in 2017.
Equity and KCB have both climbed above the Sh50 per share level, with the former reporting a 14-per cent increase to Sh18.9 billion in net earnings for 2017.
KCB’s net profit on the other hand was flat at Sh19.7 billion.