Days after Family Bank shares started trading on the Nairobi Securities Exchange, the counter has been seesawing from highs and lows as it seeks its actual trading range.
A spot check by Bizna Kenya shows that on the first day of trading, the Family Bank shares touched a high of Sh50 per share before swinging to low 20s.
In the following days after this listing, the shares recorded daily price reduction, with the counter featuring prominently on the NSE top losers chart.
According to Muthoni Njakwe, an accountant and the author of personal finance book Her Shilling, Her Power: A Woman’s Guide to Financial Freedom, buying the stock at a price of Sh50 per share may not have been a very sound investment decision.
“If you buy Family Bank shares at Sh50 after its introduction, you will cry. That’s guaranteed. Always check whether a company is trading above its book value and whether the valuation makes sense before investing. Do not just buy because everyone is buying,” says Muthoni.
“If you buy at Sh50, you will have to either cry, sell at a loss or hold through it, for several years as you wait for the fundamentals to catch up with the valuation. Do not buy the hype. Be patient. Once the excitement settles, the market usually adjusts.”
Muthoni adds that even as the market adjusts, Family Bank remains a very strong stock for investors. “This is a great stock. It has great fundamentals,” she says.
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On June 23, the counter closed trading at an average price of Sh26 per share with a traded volume of 1.87 million shares. A day later on June 24, it went down to an average trading price of Sh24.65 per share with a traded volume of 1.75 million shares. On June 25, the counter went down even further to settle at a day’s trading average price of Sh22.40 from a traded volume of 2.15 million shares.
On June 26, it gained by 9.38 percent from Sh22.40 apiece to end the week at a trading average price of Sh24.50 per share. This came from a traded volume of 1.03 million shares. On that day, the Family Bank shares touched a high of Sh24.60 and a low of Sh23.75 per share.
The Family Bank shares had listed at an introductory price of Sh18 per share. Listing by introduction means that no new shares were issued for purchase on the NSE. Instead, the bank’s existing 1.66 billion shares, which had been trading on the over-the-counter market since 2006, were transferred to the NSE’s regulated trading platform.
