Investors’ billions vanish as NSE returns worst performance in four years

Banks topped the list of worst investments among listed companies breaking a tradition at the Nairobi Securities Exchange last year in a period of record lows and harsh economic environment.

While most commercial banks are expected to sustain their profitability growth, 2015 turned out to be a turning point on their worth since all shed their valuations by as much as half. Commercial banks have in the past decade been the stars of the NSE.

Investors in all agricultural firms, whose main assets are huge land banks, ended the year on a high except Eaagads, which is associated with owners of Tatu City. The huge downturn at the stock market of more than a fifth as tracked by the NSE 20 Share Index, had major implications for investment firms such as insurance firms that have all reported profit warnings. It would be the worst performance since 2011 when the Kenyan stock market was ranked worst in Africa.

Most of the companies listed on the NSE can only hope that 2016 will not be a replica of last year, which saw share prices of 48 companies tumble as bear run persisted on the bourse.

Too bad has been the year that by August 2015, top 14 tycoons at NSE were counting Sh19.6 billion in paper loss.

Only firms in agricultural sector will have good memories for 2015 after they took the first five positions of the top 10 gainers in the year. Kakuzi Limited was the highest gainer with its share price increasing by 76 per cent to close the year at Sh317 as compared to 2014’s price of Sh180.

This performance was echoed in the quarter three data from the Kenya Bureau of Statistics that showed that agricultural sector expanded by by 7.1 per cent from 6.8 per cent in the same quarter last year.

Williamson Tea and Sasini jumped by more than half while Kapchorua Tea increased by 46 per cent and Limuru Tea by 40 per cent sealing the top five spots with their stellar performance that put the sector’s market capitalisation at Sh17.6 billion.

However, Eaagads, which owns coffee plantations behind Kenyatta University failed to match her peers and saw its share price tumble from Sh42 to Sh26, shedding more than a third of its value. It was in the same year that intr=igues into the sale of coffee farms to investors to pave way for Tatu City development hurt the firm’s stability.

Since its acquisition in 2009 by a consortium of investors led by New Zealander Steve Jennings and former Central Bank of Kenya Governor Nahashon Nyaga, bad blood between the directors and company’s local partners has not made it easy for the firm.

Kenya Power, Kurwitu Ventures, Hutchings Biemer, A.Baumann closed the year with unchanged share prices compared to 2014. Hutchings Biemer and A Baumann are however candidates for delisting as the companies behind them are not actively trading.

The year also ended with a record 16 companies issuing profit warnings, a confirmation that their returns will shrink by at least 25 per cent. This is against last year’s eleven. Of the 16, only Uchumi Supermarket saw its share price rise to close the year one position shy off the top 10 gainers after the entry of new management.

This could be viewed as a defiant outcome considering the losses, shake-up in management and closure of some of its stores during the year. Uchumi’s share price climbed from Sh10.05 to Sh10.95, a 8.96 per cent rise.

Six of the firms with profit warnings featured in the top 10 losers. The biggest casualty was Atlas Development & Support Services Limited whose share price shed off 82.57 per cent to close the year at Sh2.10 per share compared to 2014 when it ended at Sh12.05. The firm announced closure of its Kenyan subsidiaries. The company’s fortunes have been dwindling as a result of a downturn in the oil and gas exploration sector where its operations were mainly focused.

In the banking sector, all the 11 listed banks lost at least 10 per cent of their share prices’ value despite it boasting a higher market capitalisation. Housing Finance Group was the worst hit with its share dropping by more than half while Cooperative Bank had the least drop of 10 per cent. Top tiers like Barclays shed off 18.56 per cent while Standard Chartered lost 41.79 per cent. National Bank of Kenya lost 36.36 per cent to close the year at Sh15.75.

Only Kenya Re and Jubilee Holdings defied the trend in Insurance sector by recording a 23.17 per cent and 7.56 per cent increase in share prices, respectively. Other four sector players will be hoping to find their footing this year.

Britam share lost 56.30 per cent while that of Pan Africa Insurance closed the year with a 50 per cent drop. Safaricom continued to perform better at the NSE closing the year with a 16.01 per cent gain in share price. The increase pushed the telecom firm to Sh653 billion, 32 per cent of total NSE market capitalisation.

All the eleven listed banks account for a combined market capitalisation of Sh658.8 billion, defeating Safaricom with less than six billion shillings. The total NSE market capitalisation was Sh2.05 trillion. As trading at the bourse opens this year, most of the shares which have touched down may be the most lucrative for buys. Shares of banking, insurance and construction are likely to be attractive.

Already, Home Africa is showing good signs after featuring among top gainers list with 20.9 per cent week-on-week gain for the second week running.

“On sustained local speculative trading, Home Afrika was on the top gainers’ list (20.9 per cent week-on-week) for the second week in a row. The real estate company joined the band wagon of profit warning issuers after close of trading,” said Standard Investment Bank in its end-week note to investors.