Foreign investors hastened their exit from the Nairobi Securities Exchange (NSE) last month, marking the highest net selling position since March.
The offshore investors closed the month with a net selling position of Sh667.5 million from a lower exit of Sh569.9 million in October, according to fresh market data.
The selloff was the highest since March and marked a continuation of the foreigners exits for the second month running. The increased selling pressure by foreigners has been attributed to renewed investor jitters following the outcome of the US presidential election on November 5.
Foreign investors have favoured taking positions in their home markets with President-elect Donald Trump being widely expected to adopt a protectionism stance, which could favour assets in the US and other advanced economies.
“Investors are likely adjusting to the US election results and are recalibrating their portfolios towards the US and other advanced economies which are expected to grow,” noted Standard Investment Bank Research Associate Wesley Manambo.
“There is a lot of investor confidence in the American economy, be it equities or other asset classes.”
President-elect Donald Trump has threatened to slap tariffs on goods and services from markets such as China and Mexico, while he has underlined his intentions to defend the status of the US dollar as the global reserve currency, stances viewed as positive for the US economy by investors.
Foreign investors turned to be sellers in October from September in the build up to the US elections, which was seen as a key event for 2024 by investors across various markets.
Offshore investors have remained net sellers of NSE listed stocks in seven out of 11 months this year apart from April, May, June and September.
This is despite the local bourse delivering among the world’s highest US dollar denominated returns from foreign exchange gains while the NSE has delivered a mean return of 21 percent in local currency over 11 months on a year-to-date basis.
The Nairobi All Share Index (NASI) closed November at 111.53 points from 92.11 points at the end of last year.
Foreigners have also been net sellers on a year-to-date basis with a selling position of Sh1.09 billion. The foreigners are expected to remain net sellers going into the end of the year, as they complete the recalibration of their portfolios and close their books for 2024.
“There is a probability that the selloff by foreigners might run into December given this is the time when investors close their books and adjust their portfolios,” added Mr Manambo.
Foreigners have been net sellers of NSE stocks on a calendar basis since 2020, with the pandemic and high global interest rates tapering interest for local stocks by the offshore investors.
The investors have however remained important participants in the bourse, with their average participation standing at 42.07 percent in the third quarter, albeit lower than the mean 57.29 percent recorded in the second quarter.
