Monthly net foreign inflows at the NSE rose to a 33-month high of Sh2.2 billion in May as investors bought blue chip stocks whose prices have come down in recent months.
The foreign investors have now taken a net buy position at the market for four months in a row, having been net sellers for 16 straight months until January.
Market data compiled by Standard Investment Bank shows that they directed inflows mainly to Safaricom #ticker:SCOM, EABL #ticker:EABL, BAT Kenya #ticker:BAT, Equity #ticker:EQTY and KCB #ticker:KCB continuing their preference for the large liquid counters.
Analysts say the return to buying is in line with the renewed global appetite for frontier market stocks this year, a turnaround from the second half of last year when the investors fled due to financial markets instability triggered by the US-China trade war.
“With optimism and calm returning to financial markets towards the end of last year and early 2019, foreigners sought to take on more risk especially in frontier markets, accumulating equity positions at the NSE ahead of the cyclical dividend season from quarter one,” said Apex Africa analyst Gift Kori.
The most popular buy was the Safaricom with net foreign inflows of Sh1.58 billion, followed by EABL at Sh382.7 million. BAT Kenya, Equity and KCB recorded net inflows of Sh169 million, Sh167 million and Sh97 million respectively.
On the outflow side, Co-operative Bank #ticker:COOP led with net sells of Sh92 million followed by Barclays Kenya #ticker:BBK at Sh65 million.
The buying drive has also been helped by more attractive valuations at the market, with share prices generally on a downward trend during the month.
The benchmark NSE 20 share index, which mainly tracks blue chip stocks, ended the month 4.3 percent down while the All Share Index closed May 4.7 percent lower.
Local investors have also been attracted to the market by the lower share prices, raising their participation as a percentage of turnover from 24.5 percent in April to 36.5 percent in May.
Overall turnover at the NSE rose to Sh12.47 billion last month from Sh9.85 billion in April, reflecting the higher appetite for shares.