Some 20 foreign institutional investors exited the Nairobi Securities Exchange (NSE) in the first three months of 2024, new data shows, mirroring continued bearish sentiment by foreigners on local stocks.
According to fresh data from the Capital Markets Authority (CMA), the number of foreign corporate investors at the NSE fell to 412 in the first quarter of the year, from 432 at the end of December 2023. Institutional investors are large entities such as pension funds, hedge funds, and insurance companies that hire finance and investment professionals to manage large sums of money on behalf of their clients or members.
The exit of the offshore institutional investors, however, came against an increase in trading activity at the NSE and a general rise in share prices across the quarter.
Equity turnover in the three months, for instance, rose by 61.56 percent from the previous quarter, reaching Sh19.07 billion from Sh11.8 billion.
During the same period, the Nairobi All-Share Index rose by 22.78 percent to close at 113.09 points from 92.11 points, while the NSE market capitalisation was up by a similar margin, closing at Sh1.76 trillion.
Combined, foreign investors remained net sellers, disposing of Sh2.2 billion worth of NSE stocks in the three months.
The continued exit of foreigners in the opening stint of 2024 came against the expected return of big-ticket foreign institutional investors.
In March, for instance, Central Bank of Kenya governor Kamau Thugge revealed that BlackRock Asset Managers, the world’s largest fund manager by asset size, had picked Kenya among the 10 economies they had selected to invest in.
“The other day I met BlackRock Asset Managers. They came to my office and wanted to know how the economy was doing and said they had kept away from Africa for the last four years, but they have now identified 10 countries globally where they think they can start investing,” Dr Thugge told a bankers meeting.
While the CMA did not specify the names of offshore corporates exiting the market, American multinational investment management firm FMR LLC, which trades as Fidelity Institutional Asset Management, sold millions of Safaricom shares in protest of delays in dividend repatriation.
The fund manager cut its stake in the telco from 921.1 million shares in September 2022 to 314 million shares, contributing to a fall in the stock’s price.
During the same quarter, the number of foreign individual investors also declined marginally to 8,175 from 8,182, while the number of local individual investors fell to 1,246,343 from 1,246,668 in December.
The number of East African corporates in the NSE, however, rose by one to 254 from 253, while the sum of brokers was unchanged at six.
The average foreign investors’ participation in the first quarter, however, rose marginally to 60.31 percent from an average of 59.04 percent in the fourth quarter of 2023.
So far in April, foreigners’ sentiment on domestic equities has flipped with the offshore investors having made Sh820 million in net NSE stock purchases as of April 26.
