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Foreign investors pull Sh2 billion from NSE

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Economy

Foreign investors pull Sh2 billion from NSE


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Alushula

Summary

  • Foreign traders have been net sellers for all the trading days of April to date as they cut exposure in equities in search of shelter in fixed income assets, including government bonds.
  • Market data from Capital Markets Authority and AIB-AXYS Africa show that foreign investors withdrew Sh976 million between January and March and Sh1.01 billion between April 1 and April 20.

Foreign investors have withdrawn Sh1.98 billion from the Nairobi Securities Exchange (NSE) since January, with more than half of the takeaways coming in this month alone, highlighting the impact of profit-taking and fresh Covid-19 control measures announced late March.

Foreign traders have been net sellers for all the trading days of April to date as they cut exposure in equities in search of shelter in fixed income assets, including government bonds.

Market data from Capital Markets Authority and AIB-AXYS Africa show that foreign investors withdrew Sh976 million between January and March and Sh1.01 billion between April 1 and April 20.

This means that foreign investors were pulling out an average of Sh15.25 million daily from the NSE in the first quarter of the year but have raised this nearly five times to Sh72.16 million.

Investment banks have linked the increased sell-off on profit-taking following the release of results as well as the setback from fresh tough rules to curb the spread of coronavirus on sectors such as banking, hospitality and aviation.

“The sell-off is linked to profit-taking as well as the changed fundamentals of companies such as banks given that the economy has sort of been closed,” said Sarah Wanga, AIB-AXYS Africa head of research.

“Earnings have been released and books closed or the dividend paid and so foreign investors are now taking new positions based on the outlook of the economy.”

Foreign investor participation at the NSE fell to 56.37 per cent last month, the lowest since November 2019 when it stood at 55.97 per cent.

Top picks by foreign investors such as Safaricom #ticker:SCOM, Equity #ticker:EQTY, EABL #ticker:EABL, KCB #ticker:KCB and Standard Chartered Bank of Kenya #ticker:SCBK have all seen net investor selling in many of the trading days.

KCB, Cooperative Bank of Kenya #ticker:COOP, Standard Chartered Bank Kenya, Stanbic #ticker:SBIC, I&M #ticker:I&M and Safaricom announced a total of Sh51.82 billion, with that of banks coming from mid-March.

The exit by foreigners is despite the NSE posting price gains that have seen the market add Sh196.71 billion since the year started. All the three indices — NSE 20, NSE 25 and All Share Index — are also up.



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