Foreign investors at the Nairobi Securities Exchange (NSE) turned into net buyers in June as they accumulated Safaricom and EABL shares as part of a mid-year frontier market portfolio realignment.
NSE data shows that the foreign investors bought a net of Sh242.2 million worth of shares last month, halting the run of 15 months of making net sales at the bourse.
The external investors were making the buys with an eye on low-priced blue chips following a bearish run at the stock market and also taking early positions on counters such as EABL and BAT which are due to announce financial results this month with a possibility of dividends.
They were also buying Safaricom shares after the telco’s stock retreated to the Sh14 levels that were last seen eight years ago.
Safaricom has over the years been one of the few companies at the NSE to defy the prolonged bear run, partly owing to the steady demand from foreign investors who are attracted by the company’s profitability, stable dividend policy and high market liquidity to support large trades.
The company is also trading cum-dividend for the Sh0.62 per share distribution announced in May.
“Foreign investors were realigning their portfolios across the frontier market at the midpoint of the year and considered Kenya in their allocations. I would expect to see more interest from the foreign investors in anticipation of dividend declarations in counters such as EABL and BAT,” said Solomon Kariuki, an analyst at AIB-AXYS Africa.
Other than the large blue chips that are regularly traded by foreign investors, there was a rise in trades by offshore investors on Eveready East Africa and NBV from late May.
Those buying EABL and BAT have had an eye on potential dividend returns when the two firms announced their financial results for the full and half years to June respectively.
The net purchases during the month did not, however, tilt the overall trading balance for the first half of this year into positive territory, owing to heavy selling seen in previous months.
Over the half-year period, the offshore investors have a net selling position of Sh15.33 billion, where the bulk of these sales were seen in March (at Sh10.7 billion) principally on the Diageo deal to buy an additional 118.4 million EABL shares.
The net sales in the January-June period were a fifth higher than that recorded in the first half of 2022 when foreigners sold a net of Sh12.6 billion worth of shares.
These prolonged sales at the NSE have not been unique to the market however, with most global exchanges suffering the same as investors shift capital to the US and other developed markets such as the UK where interest rates have gone up over the last year-and-a-half.
Some of the investors have also exited local equities for the fixed-income market, chasing the stability of returns and higher interest rates on offer in the fixed-income market, particularly the government’s tax-free infrastructure bonds.
Over the half-year period, the offshore investors have a net selling position of Sh15.33 billion, where the bulk of these sales were seen in March (at Sh10.7 billion) principally on the Diageo deal to buy na additional 118.4 million EABL shares.
The net sales in the January-June period were a fifth higher than that recorded in the first half of 2022 when foreigners sold a net of Sh12.6 billion worth of shares.
These prolonged sales at the NSE have not been unique to the market however, with most global exchanges suffering the same as investors shift capital to the US and other developed markets such as the UK where interest rates have gone up over the last year-and-a-half.
Some of the investors have also exited local equities for the fixed income market, chasing the stability of returns and higher interest rates on offer in the fixed income market, particularly the government’s tax-free infrastructure bonds.
