Profit taking led by foreign investors at the Nairobi Securities Exchange (NSE) last week weighed down the market, shaving Sh96.1 billion and pushing the main indices into the red.
Market analysis by Standard Investment Bank (SIB) showed that foreign investors made net sales worth Sh966.7 million at the NSE last week. They had recorded net inflow positions in four of the previous five weeks.
Investors were most active on the Safaricom counter, cashing in after the telco opened the week at its all-time high of Sh32.90 recorded the previous Friday before shedding Sh1.90 last week.
“After closing at an all-time high of Sh32.90 in the previous week, Safaricom #ticker:SCOM spot investors had a rough week, as the value of their holdings dropped 5.9 percent week-on-week on profit taking by foreign investors,” said (SIB) in a market report.
“The counter recorded the second-largest net outflows in the week after Equity Bank #ticker:EQTY, which shrank 3.9 percent to close at Sh49.95, lowest in almost three months, similarly on profit-taking by foreign investors.”
Safaricom accounts for 50.1 percent of the NSE’s total market capitalisation of Sh2.478 trillion, hence its share price movement has a pronounced effect on the market’s indices and capitalisation.
Largely on account of the telco’s slide, total investor wealth at the bourse shrunk by Sh96.1 billion during the week.
It also had a significant effect on the market cap weighted NSE All Share Index, which saw a decline of 3.7 percent last week to close at 162.37 points. The NSE 20 Share Index was down 1.7 percent, closing at 2,559.05 points on Friday.
Foreign investors opt to trade in large blue chip counters — almost exclusively — because of their large volume of issued shares and good liquidity that can support large ticket trades.
They are also deemed to have more solid fundamentals and therefore carry lower risk for investors compared to some of the smaller companies at the NSE that have at times been bedevilled by financial and governance issues.
The NSE traded for only four days last week due to the public holiday on Tuesday for the funeral service of former President Daniel arap Moi.