Yesterday the Co-operative Bank share fell 0.7% to close at KES 14.35. Though this is not an extraordinary drop, it may serve as an indication of the trend the share will be following in the near future. Over the course of the day 2.05 million shares were either bought or sold amounting to KES 29.40 million.
The share hit KES 13.30 on the 27th of April but since then it has been on a steady increase reaching KES 14.60 on Tuesday.
The marginal drop in the share price could be attributed to investor expectation.
On Friday the 25th the bank is set to hold its Annual General Meeting (AGM) at the Bomas of Kenya. Among the various matters up for approval is the proposal by the Board of Directors to pay a final dividend of KES 0.40 per share and the proposal to carry out a bonus issue.
A bonus issue is an offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout. The new shares would be issued proportionately to current shareholder holdings.
Investors may expect the shareholders to approve the proposal and since new shares will be issued, the share price will be diluted. To mitigate against the loss that would be made, investors may be selling their shares and this lack of demand for the share may put downward pressure on the share price.
We will observe the share in today’s trading and see whether indeed this is the case.