NAIROBI, May 23 (Xinhua) -- A surge in the share prices of telecom and bank stocks has lifted investors' wealth at the Nairobi Securities Exchange (NSE) to a new high of 20 billion U.S. dollars as the market recovers.
Market capitalization, which measures investors' wealth, had started the year at a low of 17 billion dollars, but has been on a rally recently to hit the current level.
The highest rise in the value of the key indicator was recorded Monday, when market capitalization rose by about 200 million dollars from 19.8 billion dollars, data from the NSE showed Tuesday.
The biggest contributor to the recovery are the bank stocks, which have in total recorded gains worth 152 million dollars raising the value of the market.
Of the banks, Kenya Commercial Bank (KCB), Equity Bank and Cooperative Bank contributed the bulk of the gain.
KCB, Kenya's biggest bank by assets, has risen to a new high of 0.37 dollars down from 0.32 dollars at the start of the year.
On the other hand, Equity Bank during the period has risen to 0.35 dollars from 0.31 dollars while Cooperative Bank to 0.17 dollars down from 0.13 dollars. On Monday, prices of the shares went up by 0.7 percent, 1.4 percent and 2.7 percent respectively.
The rebound of the banking stocks is seen as a correction by investors following jitters caused by introduction of interest caps on loans, leading to declined profits.
Most of the lenders' stocks sunk to new lows as panicky investors offloaded the shares before they dipped further.
Similarly, Safaricom, Kenya's largest telecoms operator, has seen its market cap go up by 11.7 per cent to 8 billion dollars, with its price standing at 0.20 dollars, a recent high.
Analysts attributed the surge in market capitalization to dividend-chasing investors, with the rise indicating an end to a free fall that had seen the bourse touch an eight-year low in January.
The resurgence in stock prices has equally pushed up the NSE 20 Share Index hitting closer to 3,300 points.
The benchmark index ended at 3,296.16 Monday up from 3,285.49 in the previous session as it gravitated towards the new level that is six months high amid rise in share prices of large stocks.
Last week, equities turnover increased by 46 percent to close the week at 46.4 million dollars from 32 million dollars the previous week as foreigners raised their participation at the market.
However, analysts warned that the current recovery may be short-lived mainly due to upcoming elections that would cause jitters at the bourse among foreign investors.
"We expect the Kenyan equities market to be flat in 2017, driven by slower growth in corporate earnings, and neutral investor sentiment mainly due to the forthcoming general elections," noted Cytonn, a Nairobi-based investment firm. Enditem
