Foreigners remained net sellers of Nairobi Securities Exchange (NSE) listed stocks in February, marking the fifth straight month of exits.
The offshore investors ended February with a selling position of Sh1.2 billion taking cumulative net sales to Sh4.8 billion since the start of October 2024.
Year to date exits by the group, meanwhile, stood at Sh2.3 billion after net sales of Sh1 billion in January according to market data provided by local stock brokerages.
Continued exit of foreigners from the NSE is attributable to prolonged global jitters with the protectionism policies of the new US administration expected to impact global growth and performance of emerging and frontier markets.
“With the Trump 2.0 policies and the ripple effects it is having globally, there is a true chance that we might see foreigners’ flows remaining in developed markets for longer than expected,” noted Wesley Manambo, a senior research associate at Standard Investment Bank (SIB).
The NSE has, however, shaken off the selloffs by foreigners as stock prices continue to recover into the new year. It averaged a return of 34 percent in 2024 based on gains made by the Nairobi All Share Index (Nasi) despite foreigners marking net sales of Sh2.3 billion in the calendar year.
Foreigners have had a significant influence in the market in the past when they accounted for most of the trading activity and drove gains or share price declines.
While offshore investors have been exiting in recent months, local investors have been raising their stakes including in small-cap stocks.
The market recovery has extended into 2025 with the NSE seeing an 8.4 percent market capitalisation growth in the first two months of the year to Sh2.1 trillion from Sh1.9 trillion at the end of last year.
Analysts expect the NSE to continue seeing a recovery of share prices and market capitalisation but foresee foreigners exits to put a ceiling to the performance, especially for large cap stocks, which have relatively higher appeal among them.
“That means that there will be some recovery in large cap stocks but then it might not get to the point of full recovery,” added Mr Manambo.
The NSE has produced the lowest dollarised returns so far this year after Egypt and Zimbabwe at 4.4 percent as markets such as Morocco and Nigeria top returns at 15.4 percent and 10.6 percent, respectively.
The NSE had been the top market in Africa in 2024 delivering dollarised returns of 65.3 percent to foreign investors.
Foreigners have shied away from the market despite Kenya’s constituents to frontier market indices increasing over the past year.
Kenyan stocks included in the Morgan Stanley Capital International (MSCI) frontier and small caps indices are 14 including Safaricom, Equity Group, KenGen, Kenya Power and Carbacid Investments.
