Foreign investor participation drops at bourse

Analysts at PineBridge Investments — formerly AIG Investments — say stocks are fairly priced compared to other African stock markets and do not see a fall soon.

And as interest rates edge downwards and cheap credit, market observers are betting that the current rally can be sustained if events on the political front remain calm.

In an earlier interview, Mr Judd Murigi, head of research at CfC Stanbic Financial Services said foreign investors “have certain thresholds and are attracted to counters which have a high market capitalisation value and are very liquid.

They also look at the company’s fundamentals, competitive position, company prospects and target price forecasts by local and international analysts.”

Blue chip stocks with high average daily turnovers such as Safaricom, East Africa Breweries, KCB Bank, Equity Bank, Mumias Sugar and Kenya Airways have remained the investors’ favourite picks.

Price dip

This has seen foreign trades account for more than 50 per cent of these shares in the quarter ended June.

Analysts see the market remaining on a steady recovery path although there are also expectations that some profit-taking will lead to a dip in the share prices in the medium term.

The outcome of yesterday’s referendum is also expected to influence the direction of the bourse in the coming weeks.

“The markets are nervous of the outcome,” Robert Bunyi, an investment analyst at Mavuno Capital told Business Daily.