Kenya’s telco giant Safaricom has been noted to dominate all listed companies at Nairobi Securities Exchange (NSE) with a new peak after its market valuation exceeded 50 percent of the Ksh2.2 trillion stock market.
By close of Thursday, August 29, Safaricom traded at Ksh1.3 trillion, indicating a 50.7 percent of its total investor’s wealth at NSE. The performance was highly attributed to the bear run that has precipitated a sharp drop in the market capitalisation of other listed firms.
The over 50 percent indication means that Safaricom market worth is now more than the combined valuation of all the other 62 listed companies at NSE
The telco’s share price has gone up by 25 percent or Sh5.70 this year to hit Sh28.25, adding more than Sh228.4 billion to its market valuation at a time when many other companies, including other blue-chip counters, are stuck in a price slump.
The firm’s huge dominance in the market has seen a sharp contrast in the performance of key indicators, where the NSE All-Share Index and market capitalisation have gained 5.1 and 5.7 percent respectively since January, but the NSE 20-Share Index is down 13 percent to a 10-year low of 2,467 points.
Investors who track the indices are therefore presented with a situation where overall market wealth has gone up by Sh120 billion, but the benchmark index is touching multi-year lows.
The divergence in the direction of the two indices is due to the enormous influence the Safaricom stock has on the All-Share Index, which is market cap-weighted.
Safaricom reported a 14.7 percent growth in net profit to Sh63.4 billion in the year ending March 2019, on the back of strong M-Pesa and mobile data performance, marking a seventh straight year of a rising bottom-line.
The firm is paying shareholders a dividend of Sh1.25 per share, totaling Sh50.08 billion, and on top of that, a special dividend of Sh0.62 a share totaling Sh24.84 billion.
