5 February 2019

Kenya: Foreign Investors Stake at NSE Hits a 7-Year Low

Foreign investors turned net sellers for all the 12 months of trading in 2018, doubling their sell-offs and cutting stake at the Nairobi Securities Exchange (NSE) to levels last seen seven years ago.

Capital Markets Authority (CMA) data covering up to December 2018 show foreign investors' net sell-off hit Sh22.96 billion, nearly double from Sh11.58 billion in 2017. This as foreign sales surpassed purchases in all the 12 months.

"The annual net foreign portfolio flow for 2018 was an outflow of Sh22.96 billion compared to a net outflow of Sh1.58 billion in 2017. This is majorly attributed to foreign investor flight from the local capital markets," the CMA said in the latest statistical bulletin.

This marked the second straight year in a row for foreign investors to turn net-sellers even as their overall market participation dropped to 64.76 per cent compared to 64.96 per cent recorded in 2017.

February had the largest net sale of (Sh5.14 billion), followed by May and October with net sell-offs valued at Sh4 billion and Sh4.28 billion respectively.

Foreign investor holding

The sell-off pulled down cumulative foreign investor holding in the listed firms to 19.44 per cent from 20.17 per cent in 2017. The current shareholding is the lowest since 2011 when their combined stake was 19.44 per cent.

East African institutions and individuals stepped in, lifting their shareholding. Institutions increased their holdings for the fifth straight year to hit 68.5 per cent, being a level only beaten by 73.6 per cent that came in 2010.

The stake of East African individuals rose to 15.54 per cent, rising for the second straight year.

Standard Investment Bank report covering January shows that foreign investors have continued to be net sellers.

In January, net sell-off was $13.38 million (Sh1.36 billion), marking the 15th consecutive month for sales to exceed purchases.


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