The troubled WPP Scangroup led Wednesday’s top gainers on the Nairobi Securities Exchange (NSE) when its shares edged up 12.78 percent to trade at Ksh.4.06.
Outstanding performance coming on a similar day the marketing agency posted a Ksh.1.7 billion loss for the full year ended December 31, 2020.
Economic experts attributed the gains to former Chief Executive Bharat Thakrar and Chief Financial Officer Satyabrata Das being cleared of any abuse of abuse at the agency.
“The billion shilling loss came after WPP Scangroup lost some key accounts. However, the positive momentum today was largely driven by the news that its former CEO Bharat Thakrar was cleared of Gross misconduct. It’s not unusual to have a company’s stock price rising despite posting losses. A good example is Uber,” said Ken Gichinga – Chief Economist – Mentoria Economics.
There are two key drivers that explain the recent ScanGroup price movement; first is the expectation of the upcoming financials and what they’d reflect.
Secondly, is the ripple effect the suspension of senior management would have on the Group’s financial position and operations, this is according to Wesly Manambo, a financial analyst.
Since the August 2 announcement on delay in publication for the Group, the counter was on a free fall.
- CMA to sue WPP Scangroup
- WPP Scangroup CEO Bharat Thakrar resigns
- WPP scangroup shares drop after suspending two top executives
The likely explanation to this dwindle is in line with a cold market reception to the announcement (given the driver to the delay was investigations on the suspension.)
“The Group’s top line was quite impressive considering COVID-19 headwinds on the business environment. Also, the Group realized net gains on disposal of discontinued operations having the comprehensive income for the year at an commendable spot,” said Manambo.
The outstanding performance was, however, on what ripple effect the suspension on Senior Management would have on the company. “And the fact that the suspension had no direct adverse effect, I’d say the investor confidence was rubbed the right way thus the uptick today (September 1).”
Nonetheless, Nairobi Business Ventures trailed Scangroup when its shares rose by 7.49 percent, trading at Ksh.5.74 per share.
Crown Paints Kenya gained 7.31 percent while Stanlib Fahari was up 6.73 percent.
Home Afrika ended the day at 5.56 percent higher to close at Ksh.0.38 per share.
However, Olympia Capital Holdings shed 8.64 percent to emerge top of the day’s losers.
It was followed by Kakuzi which dropped 6.52 percent to close at Ksh.383.25 per share.
TPS Eastern Africa shed 6.33 percent to close at Ksh.14.05.
Liberty Kenya Holdings was down 5.13 percent, while NSE shed 4.63 percent to close at Ksh.9.68.
Safaricom was the day’s biggest mover, trading over 6.4 million shares worth more than Ksh.273 million.
Kenya Commercial Bank Group (KCB) moved over 1.6 million shares, followed by WPP Scangroup at 1.23 million shares and Co-operative Bank above 1.2 million shares.
Kenya Re closed the day moving more than a million shares.