By David Mugabe
STANBICâ€™s bonus issue did not affect the value of the shares, stock experts clarified over the weekend. A bonus issue is an offer of free additional shares to existing shareholders.
When Stanbic announced a bonus issue and a book closure date, which is a date on which the company closes its books for fresh transfers of stock, there was a rush by investors to buy and become part of the bonus offer by entering the register. This led to the rise in the share price, peaking at sh350 before book closure and falling to sh150 after book closure. However, this did not cause any loss in value.
â€œThe market had to immediately adjust to reflect the new dilution. However, the share value has not changed,â€ said Harriet Kiwanuka, the Uganda Securities Exchange (USE) head of research and market development. Whereas the share price increased, the earnings, net asset value and all the market parameters did not change, the analyst added.
â€œHowever, the share price dilutes to absorb this new development in the company fundamentals,â€ she said.
Demand for Stanbic shares remained strong on Friday, closing at an average of sh153, implying that the bonus issue on the USE that resulted into a share dilution recently, had not weakened the demand for the bankâ€™s shares.
Up to 319,882 bids were registered on Stanbicâ€™s counter on Friday.