CIC Insurance Group Ltd., Kenya’s second-biggest insurer by premiums, declined the most in almost six weeks after Standard Investment Bank Ltd. recommended investors sell the stock.
The shares fell 2.4 percent to 4.5 shillings by the 3 p.m. close in the capital, Nairobi, the biggest decline since Dec. 27. About 171 percent of the three-month average volume of shares traded, according to data compiled by Bloomberg.
Before today, CIC shares jumped 17 percent this year, leaving its 14-day relative strength index at 70.4, according to data compiled by Bloomberg. A reading above 70 means a security is overvalued and will probably fall. CIC’s RSI has been above 70 every day since Jan. 16.
“Standard Investment Bank issued a sell recommendation so it is prompting investors to take profit,” Davis Mika, an analyst at Nairobi-based Contrarian Investing Kenya Ltd., said in a phone interview. “Overall this year they may not do well because of high claims, going by the half-year earnings.”
Standard Investment Bank rated CIC Insurance as a sell, with a price target of 3.37 shillings on Jan. 30. It said CIC’s profit expansion would slow as competitors have entered the micro-insurance sector from which it had derived growth.
The insurer’s claims jumped 61 percent while expenses advanced 21 percent in the six months through June, CIC said Aug. 30.