Nairobi Securities Exchange(NSE) experienced heighted speculative activity this week that saw it temporarily halt trades on the KenGen Shares, while speculative activity continued on the NCBA Counter. While speculation can provide liquidity and facilitate price discovery, it also has an ugly side. That is, contributing to intense market volatility in the market and irrational trading activity.
At the close of the trading week at the NSE, KenGen and NCBA were on the list of the week’s top price gainers, even after KenGen shares were off the trading floor the whole day Thursday.
KenGen edged 9.43% to close the week at KSh 10.75 while NCBA, still propelling under the Standard Bank Plc buyout rumours, soared 9.31% to close the NSE trading week at KSh 91.00.
Speculators in the stock market are those who attempt to gain from short-term price movements, thriving on sentiments and not underlying company fundamentals.
In the Speculative Trading Game, the rumour phase is the most critical, whether the information is true or misinformation. For an informed investor, rumours provide both opportunities as well as risks. Seasoned players usually deploy strategy and remain tactical in speculative scenarios.
Standard Group Shares Soar as Speculators Stimulate Demand
“Whether what happened with KenGen shares was good or not, the attention succeeded in creating more attraction to the counter. Rumours always price in early before the actual deal or announcement,” said CFA Dedan Maina.
Meanwhile, the market remains suspicious and divided over whether or not leakage of the firm’s false end year financial accounts, was intentional and geared towards boosting its share price.
“The decision to halt trading in KenGen shares was made by the NSE in consultation with the Capital Markets Authority(CMA) as a precautionary measure to safeguard market integrity and protect investors from potentially misleading information,” said the NSE in a statement.
NSE Top Weekly Price Gainers
The NSE biggest weekly price gainer remained Olympia Capital, which rose 21.81% to KSh 7.82. Other illiquid counters, ScanGroup and Car&General, also featured on price gainers list this week.
Following the same script is Africa Mega Agri. Corp, which was the top price gainer when the NSE closed this Thursday.
AMAC’s stock price rose by 7.69% to KSh 70 per share, Thursday, with a traded volume of only 7 shares in 2 deals, resulting in a gross turnover of KSh 470.00.
Formerly known as Kenya Orchards, this listed firm faced significant business challenges, hitting its bottom lines and its business model wobbling at the knees. Its share price plummeted to KSh 10 from an all-time high of KSh 82.00.
Following acquisition of Kenya Orchards by Africa Mega, rumours began circulating that it would be delisted from the NSE, these sentiments feeding into the counter’s price which remained stagnant for long.
Investors interests were, however, renewed when it became apparent that the new owners Africa Mega. were not keen on delisting. In line with common market behaviour, the counter has been experiencing a rally, accompanied by periodic corrections as the share price retraces its previous levels.
Gulf Africa Innovations Limited, one of the top shareholders at Africa Mega Agri Corp Plc, recently acquired 14.21% of AMAC issued shares or 1,828,460 shares. This acquisition, which has not escaped investor attention, signifies a deeper integration of technology driven solutions into AMAC’s operations.
NSE Weekly Performance
At the end of this trading week, the NSE 20 Share Index was up 56.83 points to close at 3041.37, the All Share Index(NASI) up 3.42 points to 179.81 and the NSE 25 Share Index rose 110.63 points to 4792.90.
The NSE 10 Share index added 37.47 points to close the week at 1805.26 points. NSE Banking Index, however, fell by 3.70 points to 157.91.
The Bourse closed the week with 134 million shares valued at KSh 4.2 billion from 74 million shares worth KSh 1.5 billion recorded the week prior.
The Banking sector week’s activity had trades worth KSh 1.6 billion( 37.37%) of the week’s value. Equity moved 10.5 million shares worth KSh 629.7m and closed the week 0.42% higher at KSh 59.50. KCB closed the week at KSh 58.25 or up 2.19% and transacted a volume of 4.5 million shares valued at KSh 264 million. Standard Chartered Bank Kenya(SCBK) was up 1.46% to close the week at KSh295 with shares worth KSh 188.8m traded.
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