Foreign ownership of shares at NSE rises to seven-year high
Nairobi Securities Exchange (NSE). New stock market data shows foreign investors were holding 22.4 per cent shares as at the end of September, a level close to the 2006 peak of 25.6 per cent. Photo/FILE
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New stock market data shows foreign investors were holding 22.4 per cent shares as at the end of September, a level close to the 2006 peak of 25.6 per cent
Foreign investors’ stock ownership at the Nairobi Securities Exchange dropped sharply to a low of 7.9 per cent in 2008 following the post-election violence but has since steadily climbed to the present levels
Foreign ownership of shares at the NSE has shot to a seven-year high, totalling nearly a quarter of market value, reflecting renewed international investors’ confidence in Kenya’s economic prospects.
New stock market data shows foreign investors were holding 22.4 per cent shares as at the end of September, a level close to the 2006 peak of 25.6 per cent.
Foreign investors’ stock ownership at the Nairobi Securities Exchange dropped sharply to a low of 7.9 per cent in 2008 following the post-election violence but has since steadily climbed to the present levels.
“Our market has become attractive because it gives returns which cannot be found elsewhere in the world. The value of stocks is 40 per cent higher compared to the beginning of the year. That definitely attracts investors,” said Bob Karina, managing director of Faida Investment Bank.
The most dramatic increase in the seven-year period was in 2011, shortly after Kenya registered a 5.8 per cent economic growth rate. In 2010, international investors controlled 12.6 per cent of the bourse, climbing to 19.44 per cent in 2011 — a jump of nearly seven percentage points.
Demand for Kenyan companies’ stocks, considered a frontier market by big western investors used to multi-billion dollar deals, has risen consistently as investment options elsewhere around the world narrow.
Compared to the beginning of the year, the all-stock index (NASI) had risen by over 40 per cent while the 20-share index has climbed by just over 20 per cent.
The NSE-listed companies whose foreign shareholding is highest include Total Kenya with 94.18 per cent, British American Tobacco with 77.21 per cent, CfC Stanbic with 75.07 per cent, Standard Chartered Bank with 74.97 per cent and BOC Kenya with 73.99 per cent. These represent the oil, banking and manufacturing sectors in Kenya.
The amount of cash that has been flowing to NSE this year has been growing almost by the month. The latest NSE data shows that a net of Sh2.8 billion flowed into the stock market in October, an increase from Sh2.1 billion in September.
The amount of new cash entering the market to trade in October is due to a higher level of purchases compared to sales.
In October, foreigners bought shares worth Sh10.2 billion while they sold holdings of Sh7.4 billion.
In September, overseas buyers bought shares valued at Sh6.6 billion, but sold Sh4.6 billion worth, resulting in a net cash flow into the economy of just over Sh2 billion.
“The problems in Europe have been to our benefit in terms of giving alternatives to investors. It has helped that we have been a politically stable country for years and our economy has been growing well,” said Mr Karina.
The ramping up of local investment by foreigners, Mr Karina said, is also a result of the economic growth story of Africa as a whole and more specifically about Kenya in relation to the stock market.
Sub-Saharan Africa has grown at an average of six per cent in the past decade, although Kenya has recorded growth at a lower figure of 4.6 per cent.
