Foreigners sell Sh1.5bn stocks in first quarter on geopolitical jitters – Business Daily
Nairobi Securities Exchange (NSE) on the trading floor at the Exchange building in Nairobi on August 26, 2020. PHOTO | SALATON NJAU | NMG
Foreign investor outflows at the Nairobi Securities Exchange (NSE) #ticker:NSE have surged 60.7 percent in the three months to March, reflecting the impact of ongoing geopolitical tensions.
Data show the bourse has registered Sh1.55 billion net foreign outflows in the three months period ending March 31, compared to Sh967 million in the same period last year.
Analysts have said that investors have become net sellers in the emerging and frontier economies including Kenya, seeking higher yields in their home markets amid the geopolitical risks.
This is also coupled by increased interest rates in markets such as the US, promising investors higher yields.
Major exits have been witnessed on counters with high foreign investor play such as East Africa Breweries Limited (EABL), Safaricom, KCB Group and British American Tobacco.
“It has nothing to do with fundamentals. This is because companies such as banks and Safaricom reaped big and paid high dividends,” said Kenneth Minjire, senior associate for debt and equity at stockbroker AIB-AXYS.
“It follows a blanket offshore exiting from frontier markets as investors move cut risks. We expect to see a reverse after currency and global markets stabilise.”
The impact has been compounded by the subdued investor confidence over the upcoming elections, setting higher uncertainty in the market.
The drawdown points to drift from a positive pace recorded in first week of January when the inflows were recorded at Sh367.28 million over increased investor optimism and expectation of a gradual recovery of the global economy in the year.
Foreign investors have been net sellers consecutively from the week starting February 18, reflecting the ongoing Russia-Ukraine conflict and sanctions imposed on Russia.
The selling however trails the biggest outflows that happened in the quarter to March 2020 when the markets and offshore investors sold at Sh11.18 billion after hit of the pandemic.
The outflows proceed a continued low performance of the securities exchange market and lower share prices, with the bourse market capitalisation having dropped to Sh2.43 trillion as at April 1 from Sh2.60 trillion at the opening of the year.