Capital Markets

Foreign investors record Sh242m net inflows at bourse

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A stockbroker at the Nairobi Securities Exchange trading floor. FILE PHOTO | NMG

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Summary

  • Their buying activity, combined with higher participation from local investors, helped the benchmark NSE 20 share index gain 1.9 percent during the week to 2,063 points, and traded turnover to rise by 1.6 percent to Sh2.02 billion.
  • Foreign investors have largely tended towards the buy side in recent weeks, attributed to payments of interim dividends and increased net profits in the first half year period by companies.

Foreign investors at the Nairobi Securities Exchange (NSE) recorded net inflows of Sh242.3 million last week, reversing the previous week’s net outflows of Sh208.5 million as they bulked up on Safaricom and large banks’ shares.

Their buying activity, combined with higher participation from local investors, helped the benchmark NSE 20 share index gain 1.9 percent during the week to 2,063 points, and traded turnover to rise by 1.6 percent to Sh2.02 billion.

Foreign investors have largely tended towards the buy side in recent weeks, attributed to payments of interim dividends and increased net profits in the first half year period by companies.

In August, they recorded net inflows of Sh1.72 billion, the first month of net buying since January.

“Foreign investors turned bullish in the week accumulating on Safaricom, Equity, KCB and Bamburi Cement while exiting on EABL,” said analysts at city based investment bank Genghis Capital in a market note.

Safaricom accounted for bulk of foreign inflows at a net of Sh120.7 million during the week, followed by KCB at Sh96.1 million and Equity Bank at Sh27.4 million. EABL led on outflows at Sh22.4 million.

The return to buying by the foreign investors bodes well for the NSE, which has in recent years struggled to record much gain in valuations due to the selloffs and rush to profit taking whenever a stock made capital gains.

Foreign participation as a percentage of total turnover however stood at 31.2 percent, down from 56.7 percent in the previous week, highlighting the increased trading appetite by local investors.

Trading was, however, concentrated on the largest stocks at the bourse, which have the necessary liquidity to support large ticket trades that are favoured by foreign and institutional investors.

The NSE said in its end of week report that the top five companies by market turnover last week—Safaricom, Equity, KCB, Bamburi and EABL— together accounted for 91 percent of the markets total traded turnover (or Sh1.84 billion).