Foreigners trickle back to the Nairobi bourse

Foreign investors at the Nairobi Securities Exchange (NSE) #ticker:NSE have in the past week turned net buyers, bucking the recent trend of selloffs that has contributed to the current low valuations at the bourse.

Market reports compiled by Standard Investment Bank show that foreign investors have been net buyers in five of the last six trading sessions, with their demand mainly on the Diageo majority-owned EABL #ticker:EABL stock, which is trading at a seven-year low.

Last week, they bought a net of Sh117 million worth of shares and continued the trend on Monday with net buys worth Sh30 million. “Foreigners have continued to take interest in multi-year lows at which the alcohol manufacturer (EABL) is currently trading,” said SIB in a market note.

The brewer — one of the largest blue chip stocks popular with foreign investors — is currently trading at Sh170 a share, levels last seen at the beginning of 2012. There has also been increasing buying activity on Safaricom, which was yesterday trading at Sh23.75, on account of the recent price fall on the counter that now sees it stand at -11.2 per cent in the year-to-date.

The activity in the past week was in contrast with the practice seen for most of this year, where external investors have followed the global trend of sell-offs emerging and frontier market holdings and taking capital into the US market where interest rates have been rising.

Capital Markets Authority (CMA) data shows that by the end of the third quarter, foreign investor holdings at the NSE were equivalent to 19.85 per cent of the 96.24 billion issued shares at the bourse, having come down from 20.2 per cent in January.

Although they hold a lower number of shares, foreign investors have dominated the turnover charts at the bourse this year, averaging more than 60 per cent, largely on the selling side as locals continue to take a wait-and-see attitude.