NSE sees new slide as dividend season closes


NSE sees new slide as dividend season closes

In Summary

  • All three NSE indices remained on a downward trajectory taking their year to date (YTD) losses to 19.9 per cent, 32 per cent and 25.4 per cent for the Nairobi All Share Index (NASI), NSE 20 and NSE 25.
  • With the majority of firms now closing their books for the pay-out, the demand for shares at the NSE has trended downwards causing the sharp declines first triggered by heavy foreign investor sell-offs on March 13.
  • The trend of return is now expected to be altered by the reporting of half year earnings which start this month.

The Nairobi Securities Exchange (NSE) has begun witnessing a new slide as listed entities close their books ahead of dividend payments.

The second-wave slide which follows COVID-19 shocks in March and April has seen an extension of losses of the bourse main indices.

In July for instance, all three NSE indices remained on a downward trajectory taking their year to date (YTD) losses to 19.9 per cent, 32 per cent and 25.4 per cent for the Nairobi All Share Index (NASI), NSE 20 and NSE 25.

The three indices further closes the day on Wednesday having shed a further 4.9 per cent, 2.4 per cent and 3.5 per cent from July 30.

The fresh slide has coincided with the closure of books by firms who are now set to pay out final dividends to shareholders.

The dividends had held up the market from buckling further as investor sought to attach to the companies shares for the final pay-out.

With the majority of firms now closing their books for the pay-out, the demand for shares at the NSE has trended downwards causing the sharp declines first triggered by heavy foreign investor sell-offs on March 13.

Among the notable companies to close their books is Safaricom which closed its books on July 31 and pays out a final Ksh.1.40 settlement per share on August 31 and WPP Scangroup which pays a special Ksh.8 dividend on August 27 after closing its books on July 28.

Subsequently, share prices have begun sliding with market leader Safaricom for instance seeing a 7.6 percent dip in its share value to Ksh.26.15 a piece since its book closure.

Other notable firms to close their books for dividend have included Kapchorua tea which is set to approve the payment of Ksh.10 a share.

Upcoming book closures are meanwhile set to further end the high demand of share buys including Williamson Tea which closes its book for a Ksh.20 final dividend on August 18 and BAT whose book closure for a Ksh.3.50 interim dividend pay is slated for August 21.

The NSE has continued to record negative returns from significant foreign investor selloffs who now favour safe heaven investments.

The trend of return is now expected to be altered by the reporting of half year earnings which start this month.

Earning by listed firms are expected to reveal the significant impact brought forth by COVID-19.

Most recently, British American Tobacco (BAT) Kenya and the East African Breweries Limited (EABL) have revealed depressed sales in their half year and full-year earning respectively.

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Story By Kepha Muiruri
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