On the 23^rd of April Kenya Re-insurance Corporation released its financial results for the period ended 31^st December 2011. It reported a 24% increase in its profits from KES 1.66 billion to KES 2.036 billion. In light of this, the board of directors recommended a dividend payment of 35cents per share and a bonus share issue of 1 new ordinary share for every 6 ordinary shares held subject to regulators and shareholder’s approval at the AGM to be held on the 8^th of June 2012.

In the aftermath of this announcement we have noticed that the share has consistently appeared in the highest gainers, increasing by as much as 16.25% on April 24^th. Consequently, here at pesatalk.com we have highlighted the Kenya Re share in the Stocks Watch on several occasions, the graph below depicts the trend the share has followed over the last few weeks:

[caption id="attachment_6582" align="alignleft" width="605" caption="Image sourced from www.bloomberg.com"][/caption]

The share price has risen from KES 8 per share on the 20^th of April to a 15 month high of KES 11.05 observed yesterday.

This increase may be propelled by the following:

• Increased investor demand due to the possibility of an impending bonus issue. It is possible that investors are scrambling to buy the share and guarantee themselves extra shares at no extra fee should shareholders approve the bonus issue.
• Increased investor demand due to improved valuations of its real-estate investments. The value of its real-estate investments has gone up after the National Social Security Fund, the state-run pension fund, advertised for sale two office blocks it owns in Nairobi for more than 2 billion shillings. This would mean that investors would receive higher returns over the next financial period. This possibility may be driving the demand and consequently pushing the share price upwards.

It will be interesting too see how much higher the share will rise to satisfy this increased investor demand.