The value of shares traded on the Nairobi bourse yesterday hit a three-year high, buoyed by a rally in Safaricom and banking stocks that has seen investors gain Sh207.5 billion since mid-May.

Nairobi Securities Exchange (NSE) data showed that the market gained for the fifth day in a row to close trading at Sh2.7232 trillion—a value last seen in April 2018.

Safaricom, Equity, KCB, East African Breweries Limited (EABL) and Cooperative Bank of Kenya—which now account for 81 percent of NSE wealth—added Sh191.61 billion in the days since May 19.

This means that the five stocks accounted for 92.34 percent of the additional paper wealth.

The dominance of five out of the 56 active firms at the NSE has exposed the distortion of the bourse’s performance by the blue chip stocks, which is making it difficult for investors to gauge the performance of the NSE.

The NSE seems to be on a bull run and fully recovered from the effects the Covid-19 pandemic, as investors bank on a rollout of vaccines to keep the global economic recovery on track.

Safaricom’s value has increased Sh158.26 billion since May 19, followed by Equity (Sh14.34 billion), KCB (Sh7.23 billion), Cooperative Bank (Sh7.04 billion) and EABL (Sh4.74 billion). The rest of the counters added Sh15.9 billion.

Analysts link the share gains to the sustained recovery of business performance across sectors, dividend declarations and payouts as well as corporate announcements like stock buybacks by firms like Nation Media Group.

“The confidence in equities has been returning on the back of improving business prospects. The recovery in earnings has seen many companies resume dividend payment and this has further given legs to the rally,” said Churchill Ogutu, Genghis Capital senior research analyst.

“We have also seen a lot of announcements among the large and middle level companies such as Safaricom, I&M, Nation Media Group (NMG) and Nairobi Business Ventures (NBV). This has given stocks some positive momentum in the short run.” I&M announced a bonus issue while NBV has lined up Sh18 billion to launch into cement manufacturing, vehicles repair and airline servicing.

NMG on Monday started buying up to 10 percent of its issued shares in Kenya’s first-ever public stock buyback programme, offering investors a chance to cash out. The media house’s stock has gained 59 percent since the start of the year while NBV has seen a 130 percent jump. The NBV share was below Sh1 late last year.

The NSE has now cumulatively added Sh386.5 billion since January, with 31 stocks having added wealth to the investors.

The latest NSE performance is in stark contrast with that six months to June last year when the market shed Sh435.65 billion as investors dumped equities to seek shelter in bonds and gold at the onset of coronavirus.

Safaricom, whose share closed yesterday at Sh42, recommended a final dividend of Sh36.86 billion, despite posting the first drop in full-year profits since 2012. A consortium led by the telco was declared winner for the first private owned telecommunications operator in Ethiopia and pledged to maintain a dividend policy of paying out 80 percent of its net profit.

The consortium is expected to invest over $8 billion (Sh862 billion) over the next decade in its operations in Ethiopia and wants to use both debt and part of its retained earnings. Banks have seen a gain on their stocks after the first quarter results announced in May pointed to a recovery from shocks linked to Covid-19 loan defaults that hurt profits last year.

Commercial banks’ quarter one pre-tax profits jumped 19.5 percent to a record Sh45.9 billion, defying an overall economic downturn due to the Covid-19 pandemic.

KCB, Cooperative Bank, Standard Chartered Bank Kenya, Stanbic, NCBA and I&M paid a total Sh33.82 billion.

Equity, which froze payout for the second year running, last week changed its policy to allow for payouts of between 30 percent and 50 percent of net profit going forward.

The EABL share has braved a series of bar, restaurant and other entertainment joint closures to rise by about 17.4 percent since January.

The brewer expects sales to recover from a coronavirus-induced slump in the second half to June as regional countries relax measures to curb the spread of the virus.