Safaricom spurs return of NSE foreign investors

Foreign investor flows at the NSE returned to positive territory in August, helped by interest in the Safaricom stock ahead of the firm’s September 2 books’ closure for a Sh1.44 dividend payout.

Foreigners put in a net of Sh1.52 billion during the month, snapping the trend of outflows seen in the previous two months, market data compiled by Standard Investment Bank shows.

Safaricom recorded net inflows of Sh1.83 billion, followed in a distant second by EABL at Sh224 million and BAT Kenya at Sh12.4 million. The inflows helped cancel out the net outflows seen on other large caps like Equity Holdings (Sh378 million), Kenya Re (Sh112 million) and KCB (Sh42.8 million).

The telco’s allure was amplified by the final dividend of Sh0.62 and a special dividend of Sh1.25 per share, which investors were scrambling to qualify for in a market that has been offering little in way of capital gains over the past year.

During the month, Safaricom’s stock gained 2.7 percent to Sh28.15, with a year-to-date gain of 26.8 percent that remains the biggest among the top 20 firms at the NSE by market capitalisation. This combination of capital gains and dividend has made the stock attractive to foreigners, who are also conscious of its high liquidity in the market, which supports easy entry and exit for large ticket buyers.

Although returning to a net buying position, foreign investor activity as a share of total traded turnover during the month fell to 62.3 percent compared to July’s 66.9 percent.

Overall, turnover fell by nearly a quarter during the month to Sh8.7 billion compared to July’s Sh11.4 billion, while the NSE 20 share index was down 6.1 percent, the All Share index by 0.7 percent and the NSE 25 index by 1.7 percent.

Safaricom accounted for 52 percent of the month’s traded turnover.