Foreign investors made weekly net purchases at the Nairobi Securities Exchange (NSE) for the first time in two months, on increased demand for the Safaricom share, helping the market add Sh60 billion in valuation.
The external investors made net buys worth Sh225.7 million last week, ending a run of exits that dated back to the first week of October. In the period, they had made net sales of Sh2.4 billion, largely on large blue chip firms.
Safaricom led the market with net foreign purchases of Sh335.7 million last week, followed by Equity Group at Sh35.6 million. On the selling side, KCB Group led with net exits worth Sh118.2 million.
The telco has seen its share price go up by 19 percent in the last two weeks to trade at a six-week high of Sh17.10 per unit, partly helped by demand from foreign investors.
Before the buys last week, foreign investors had adopted a bearish outlook on the NSE, reflecting uncertainty around the impact of the shift in US economic policy after the election of Donald Trump back into the US presidency last month.
Mr Trump is widely expected to take a protectionism stance that will favour the US economy and US assets, making them more attractive to foreign capital.
He has threatened to slap tariffs on imports and defend the dollar as the global reserve currency, stances that are viewed as positive for the US economy by investors.
The inflationary impact of tariffs is likely to slow down the pace of US rate cuts, which are seen as key in unlocking the flow of investment capital from the country into frontier and emerging markets including Kenya.
High US interest rates – raised to fight inflation— were among the key reasons for the high volume of exits from the NSE since 2020.
In the year to date, foreigners have made about Sh2.06 billion in net sales at the NSE, despite the market offering high dollar-denominated returns on account of a strengthening shilling.
The Kenya market on the Morgan Stanley Capital International (MSCI) index has gained 62 percent, helped by both share price gains among constituent stocks and the 21 percent appreciation of the shilling against the dollar.
This dollarised return is a key consideration for foreign investors, as is the availability of foreign currency and the liquidity of a stock, which helps in supporting large ticket trades.
The NSE has 12 of its constituent stocks included in the MSCI frontier markets and small caps indices.
Large-cap stocks of Safaricom, Equity Group, EABL, KCB Group and Co-operative Bank are in the main frontier market index, while BAT Kenya, KenGen, Kenya Re, Kenya Power, Bamburi Cement, Carbacid, and DTB Group are on the frontier markets small cap index.
