Capital Markets

NSE foreign investor outflows halve to Sh4.5 billion in Q3

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Nairobi Securities Exchange. FILE PHOTO | NMG

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Summary

  • The Capital Markets Authority (CMA) market bulletin for the third quarter showed that foreigners increased their share of traded turnover in the quarter to 67.1 percent from 64.6 percent in the second quarter.
  • The arrival of the Covid-19 pandemic in the country in March increased pressure on the equities asset class, with investors jittery over the performance of companies during the pandemic.
  • Firms reported lower earnings for the first half of the year, citing reduced business due to the social restrictions in place from April.

Foreign investors at the Nairobi Securities Exchange (NSE) made Sh4.53 billion net sales in the third quarter of the year, although the volume of outflows halved compared to the second quarter.

The investors made Sh10.25 billion net sales in the second quarter of the year.

The Capital Markets Authority (CMA) market bulletin for the third quarter showed that foreigners increased their share of traded turnover in the quarter to 67.1 percent from 64.6 percent in the second quarter.

During the quarter under review, foreign investors made their largest net sale in July at Sh5.34 billion, but turned net buyers in August and September with net inflows of Sh10 million and Sh802 million respectively as they returned to the market to take advantage of attractive entry prices as the economy reopened following Covid-19 related restrictions.

This brings the total net outflows in the first nine months of the year to Sh25.96 billion, compared to Sh2.22 billion net inflows in the corresponding period last year.

There was a slight reduction in the traded turnover however, partly due to reduced activity by local investors.

“Equity turnover for the period stood at Sh37.94 billion, compared to Sh39.53 billion registered in quarter two—a 4.02 percent drop—confirming a slight decrease in trading activity at the bourse during the quarter,” said the CMA in the bulletin.

“The NSE All Share Index recorded a 1.61 percent increase to close the quarter at 139.89, reflecting a general rise across all counters, while the NSE 20-Share Index recorded a 4.63 percent decrease to close the quarter at 1,852.29 points, pointing to a drop in the prices of blue chip companies.”

The arrival of the Covid-19 pandemic in the country in March increased pressure on the equities asset class, with investors jittery over the performance of companies during the pandemic.

Firms reported lower earnings for the first half of the year, citing reduced business due to the social restrictions in place from April. The resultant layoffs and job cuts also cut the spending power of Kenyans, leaving firms staring at reduced business as the pandemics ’hit took the effect of a vicious cycle.