Safaricom shares hit record high on Ethiopian licence

Safaricom shareholders saw a remarkable increase in paper wealth by Sh90.1 billion as investors eagerly purchased the company's shares following the award of a license to enter Ethiopia's market. This surge in value marks one of the largest one-day gains in the history of the Nairobi Securities Exchange. Stellah Swakei, an Investment Analyst at Cytonn, provided insights on the significant developments. Safaricom's share price surged from 39 the previous week to 41 on Monday, recording the highest turnover in the NSE market at 70.8% to 2.6 billion from 9.8 billion in the previous week. The telecommunications sector, led by Safaricom, dominated the week's trading, accounting for 81.5% of the total traded value amounting to 66.9 million. Across the board, Safaricom posted a 0.25% increase and closed the week at 39.5%. The Nairobi Securities Exchange witnessed a 59% increase in turnover, with Safaricom playing a significant role in driving this growth. However, it was noted that the banking sector, represented by banks such as Equity and KCB, also contributed substantially to this surge. On the contrary, sectors like manufacturing and construction saw minimal activity, with companies like Bamburi and KCB Group recording marginal percentage losses. Ungar Group PLC stood out as the top price loser, experiencing a 5.25% decline month-on-month and a 9.26% decrease on a weekly basis. The market reacted negatively to the news of the company shutting down its bakery in a bid to reduce costs amid the uncertain business environment brought about by the COVID-19 pandemic. To reverse this downward trend, Ungar Group PLC is considering enhancing its supply to boost revenues and streamline costs. In the secondary market, treasury bills experienced notable activity with overall favorable subscription rates. The 360.4-day paper recorded a subscription rate of 121.3%, up from 22.6%, demonstrating sustained investor interest driven by attractive returns. Yields for various treasury bills saw declines, with the 91-day paper dropping to 7.2%, the 182-day paper to 8%, and the 364-day paper to 9.3%. The government continued to favor cost-effective bills, accepting offers amounting to 22.4 billion out of the 38.9 billion in circulation.