Kenya Commercial Bank Ltd., the country’s biggest lender by assets, fell the most in nine months and snapped eight days of gains after technical indicators signaled to some analysts the stock was overvalued.
KCB, as the lender is known, declined 5.2 percent to 36.50 shillings a share by 1:53 p.m. in the capital, Nairobi. A close at that level would mark the largest fall since May 22, according to data compiled by Bloomberg. More than 4 million shares traded, 219 percent of the three-month daily average.
The stock had risen 15 percent in the eight trading days through yesterday, boosting its year-to-date rally to 22 percent, the sixth-best performing company on the Nairobi Securities Exchange.
“KCB has been rising in anticipation of full year results,” Moses Waireri, a research analyst at Nairobi-based Genghis Capital Ltd., said in a phone interview today. “Some investors are selling because the stock is now overvalued at current prices; there is no fundamental reason why it should be trading at 38 shillings.”
KCB closed at a record of 38.5 shillings yesterday, putting its 14-day relative strength index at 90, according to data compiled by Bloomberg. A reading above 70 signals to some analysts that a security is overvalued and will probably fall. KCB’s RSI was above 70 every day since Feb. 4.
The company will announce full-year earnings on Feb. 28. Profit in the nine months through September surged 35 percent to 8.69 billion shillings ($99.3 million) as income from loans grew, it said Oct. 25.
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