Safaricom shares accounted for 15 per cent of total turnover at the stock market in 2011, indicating its towering influence over the fortunes of the exchange. About KES11.6bn worth of Safaricom’s shares were traded out of a total market turnover of KES78bn, putting the mobile phone firm top of list of most actively traded stocks at Nairobi Securities Exchange (NSE) last year. The stock closed the year at KES2.95 per share— nearly half of its 2008 initial public offering (IPO) price— having shed about 37 per cent of its value in 2011 alone. Safaricom reported its first year-on-year drop in profitability last year. Analysts attribute the high turnover on the counter to both the high number of shares available for trade, also called liquidity, and the low unit price which allow for big trading volumes. “Safaricom is a very liquid stock, allowing for huge transactions,” said Onesmus Nzioka, head of research at Sterling Capital. An estimated 800,000 investors bought Safaricom shares in a highly over-subscribed IPO in 2008. It has a free-float of 10bn shares, the largest of all NSE-listed firms. The firm has more than 700,000 shareholders dominated by small local investors according to the latest data from the Capital Markets Authority. Treasury and Vodafone control 35 per cent and 40 per cent of the telecommunications firm respectively. Safaricom’s shares were priced at KES5 for local investors and KES5.50 for foreigners in the IPO, before appreciating to record highs of KES7.85 on the second week of trade. Mr Nzioka said the low unit price on the share makes it a penny stock, meaning huge volumes can be transacted with relatively small amounts—providing investors an opportunity to make big returns from a small price gain. “The high volumes on the Safaricom counter have also been helped by the fact that this is a stock on a company with very strong fundamentals,” he added. Other stocks that made it to the top five most traded counters include Equity Bank which recorded a turnover of KES10.4bn, East African Breweries (KES9.7bn), KCB (KES8.8bn) and electricity distribution firm, Kenya Power (KES5.1bn). George Bodo, a research analyst at Apex Capital said these five stocks represent the most liquid counters and are also considered NSE’s blue chip companies with strong fundamentals. As a result, they have a wide appeal to foreign investors who move huge volumes at the NSE. Performance of the stocks also mirrors performance of the bourse. “The most traded counters also represent companies with very strong fundamentals, which is a critical attribute that foreign investors are looking for,” said Mr. Bodo. He added that “Safaricom witnessed brutal sell-offs by the local investors last year, in a way unfairly punishing its share price.”