Foreign investors accumulated new shares in KCB Group at the fastest pace in 10 years in 2024, contributing to the bank’s share price rallying by 90 percent in the period.
Regulatory filings show that the foreign investors bought 69.3 million KCB shares in the 12 months to December, taking their total ownership of the bank to a four-year high of 355.48 million shares.
Going by the bank’s current share price of Sh45.8, the additional shares acquired by the investors are worth Sh3.17 billion.
The records show that the bulk of the purchases took place in the second and third quarters of the year, coinciding with the promotion of the bank to the closely watched Morgan Stanley Capital International (MSCI) main frontier markets index from its small caps index in May. This helped increase the visibility of the stock among foreign investors.
KCB’s share price was also boosted by the lender announcing Sh1.50 per share interim dividend for the half year to June, following an 87 percent jump in its half-year net profit to Sh29.1 billion.
In 2023, the bank had skipped paying a dividend for the first time since 2022 as it sought to conserve capital and boost the capital base of its main subsidiary, KCB Bank Kenya.
The holdings by foreigners had been on a general decline over the previous 10 years, including major selloffs in 2018 and 2020, which helped reduce their share of the total shareholding to a low of 8.86 percent or 284.7 million shares in the year ending December 2022.
This percentage holding recovered to 11.1 percent by the end of last year, even though it is still well below the highs of 28 percent to 30 percent recorded between 2013 and 2017.
The renewed interest in the KCB stock by foreigners also reflected a general positive shift in sentiment towards the Nairobi Securities Exchange (NSE), following the easing of a dollar supply crisis and the subsequent strengthening of the shilling in the forex market, which gave dollar investors exchange gains on their portfolios.
Helped by the shilling’s gain against the US currency at a time when other African currencies depreciated, the NSE emerged as the top performing African market in dollar denominated returns, as measured through the MSCI indices.
The NSE’s 11 stocks, which are included in the frontier and small cap indices, gave investors a dollar return of 65.3 percent, well ahead of Côte d'Ivoire (34.9 percent), Mauritius (26.3 percent), Senegal (25.1 percent) and Morocco (16.2 percent).
The MSCI had frozen reviews of its Kenyan index between August 2022 and May 2024 due the forex crisis, effectively stopping the introduction or removal of constituent companies and adjustments on their weighting within the index.
The reviews are meant to give investors an up-to-date picture of the state of an exchange, allowing them to make informed investment decisions. By lifting the freeze and increasing the number of constituent companies from four to 11, the MSCI helped to reset investor sentiment towards the NSE, boosting inflows.