Share prices rally as top managers increase stake in listed firms

Co-operative Bank CEO and MD Gideon Muriuki /HANDOUT

The trend where top managers of listed companies are buying more shares is inspiring hope about the future of that firm, with share prices rallying on rising investor confidence.

In the past two weeks, regulatory filings both at the Capital Markets Authority (CMA) and the Nairobi Securities Exchange (NSE) have shown that at least three top managers of listed firms, including Co-operative Bank Group, Centum Plc, and another top listed bank, have increased their stake in their companies.

A filing seen by the Star shows that Cooperative Bank Group managing director, Gideon Muriuki, has bought an additional 12 million shares in the bank in what analysts tip as a mark of confidence that is likely to rally the share price of the third biggest bank in Kenya in terms of assets.

This puts the value of the new shares by the Group MD at Sh203 million, raising his stake by 20 basis points to 2.2 per cent.

Cumulatively, Muriuki now holds at least 13.2 million shares valued at Sh2.3 billion, keeping him firmly in place as Co-op Bank’s largest individual shareholder.

This has seen the bank’s share price at the Nairobi bourse rally, hitting a high of Sh17 last week. It shed 0.59 per cent on Friday to close the week at Sh16.75.

On March 5, NSE-listed investment firm Centum Investment Company PLC's share price rose to a high of Sh15.70, days after regulatory filings showed that top managers at the company, including CEO James Mworia, had increased their stake in the firm.

Mworia now holds close to six million shares in the company, while the founder’s son-in-law and key director, Andrew Musangi, holds close to a million shares.

Last week, the board proposed a final dividend of Sh0.32 per share, amounting to Sh210 million, subject to shareholder approval at the upcoming Annual General Meeting.

This saw the firm’s share price increase by two per cent to close the week at Sh12.

Generally, the NSE reported low activities during the week under review, the NASI, NSE 25 and NSE 20 share price indices decreasing by 1.6 per cent, 1.0 per cent and 1.1 per cent, respectively.

Market capitalisation, equity turnover, and total shares traded also decreased by 1.6 per cent, 25.1 per cent and 10 per cent, respectively, with shareholders’ wealth decreasing by Sh40 billion.

Even so, there were increased activities in the bond market, with the domestic secondary market increasing by 79.9 per cent during the week.

Investors continued to buy government securities despite yields stagnating for the fourth week in a row.

Data from the CBK bulletin shows that bids totaling Sh27.8 billion were received for T-Bills against an advertised amount of Sh24 billion, representing a performance of 115.9 per cent.