Foreign investors at the Nairobi Securities Exchange (NSE) #ticker:NSE made net inflows of Sh1.86 billion into the market in 2019, reversing the trend of heavy net outflows they recorded in the previous two years.
The investors made their largest buys in March, May and August, taking advantage of lower prices in the first half of the year to bulk up on blue chips, market data compiled by Standard Investment bank shows.
Safaricom accounted for the bulk of the foreign buying activity, with the stock recording a 2019 net inflow position of Sh4.6 billion, followed by EABL #ticker:EABL at Sh823 million and BAT Kenya #ticker:BAT at Sh537.8 million.
On the net outflow side, the Equity Holdings #ticker:EQTY stock led with net sales worth Sh1.89 billion, followed by Barclays Kenya #ticker:BBK at Sh890.4 million and Jubilee Holdings at Sh603.7 million.
It helped that the investors narrowed their dollarised losses on the main NSE 20 Share Index, which tracks the blue chips that foreigners concentrate on.
“Using the NSE 20 Share Index, the market posted a dollar loss of 5.9 percent albeit an improvement compared to a dollar loss of 22.6 percent posted in 2018,” said Kingdom Securities in a market summary.
The NSE 20 Share Index closed 2019 6.3 percent lower at 2654 points, while the NSE All-Share and NSE 25 Share indices were in the black, ending the year up by 18.5 percent and 15.5 percent respectively.
Investor wealth as measured by market capitalisation rose by Sh400 billion to hit Sh2.5 trillion, largely boosted by gains on the Safaricom and large banks.
In 2018, foreign investors had recorded net outflows of Sh28.9 billion, following on from net sales worth Sh11.9 billion in 2017.
They normally trade on the large blue chips that have the necessary market liquidity to support large ticket trades and those that are also more consistent in dividend payments, which offer a return even when a share price goes down.