HIGHEST VOLUMES

Our usual suspects graced the top traders for the day by volume. In first place again was Safaricom which saw 13.20 million shares traded. In second place (yet again) was Equity bank with 6.29 million shares, up from 4.59 million shares yesterday. Third spot went to a new entrant Centum Investment Limited which saw 3.1 million stocks changing ownership. Kenya Commercial Bank dropped one spot from the past two days to trade as the fourth highest stock with 3.01 million stocks.

COUNTER WATCH

We took a different approach to the counter watch and worked with 1000 shares in each of the following; British American Tobacco (BAT) and Kenya Airways (KQ). Here’s how our portfolio looks like at the end of the day.

• British American Tobacco (BAT) – The stock closed at KES 458, up by KES 9 from yesterday’s close. Opting to sell them would result in a loss. How so? The total value of the stocks would stand at KES 458,000 and selling them would invite a transaction cost worth 2% of this total value. The amount left over would be KES 448,840 which is less that the total value of the shares at the beginning of the day (by KES 60). Selling them is definitely not an option. It would only be beneficial the stock’s price had closed by an amount equal to or above KES 459.
• Kenya Airways – The stock closed at KES 12.20, an increase by 1.24% from yesterday’s close. We took a leap of faith and purchased these based on shareholder’s firm belief that the stocks will perform well despite incurring a profit-after-tax loss of KES 4.8 billion. Much like the case with BAT, selling these would result in a loss. The stocks are currently worth KES 12,200 and selling them will have us incur transaction costs, leaving us with KES 11,956. This amount is much less than the amount we spent earlier on to purchase them. Selling them for a quick shilling is definitely crossed from the to-do list.

The total value of our day’s portfolio stands at KES 470,200 compared to KES 470,460 at the beginning of this day. The point of this portfolio is to show that by calculation, one should consider disposing of a stock if it has made a gain worth more than the transaction charge. If the charge is 2%, then selling it when it has made gains greater than this would yield profits.