Christmas, school fees keep locals away from NSE

Local participation in equity turnover dropped to 16.7 per cent on Monday as investors focused on the festivities and school expenditure. FILE

By CHARLES MWANIKI


IN SUMMARY
Local participation in equity turnover has fallen below 20 per cent in the past three trading sessions since Friday.
Analysts project selloffs in early January as investors free up cash for paying school fees and other annual obligations.

Local investors have cut sharply their participation at the Nairobi Securities Exchange, leaving foreigners to dominate turnover in what market analysts attributed to consumer spending demands of the festive season and New Year.

Local participation in equity turnover has fallen below 20 per cent in the past three trading sessions since Friday, with analysts projecting selloffs in early January to free up cash for paying school fees and other annual obligations.

“Market capitalisation expanded to Sh1.9 trillion from Sh1.89 trillion on the back of a share price rally driven by foreign investors. We opine that the foreign investors are taking long positions on specific large cap counters in preparation for the market rebound in quarter one 2014 at this time before risk of a minor sell-off in January when demand for cash is high,” said Genghis Capital in a Tuesday research note.

In Friday’s session, local investors accounted for 19.2 per cent of turnover at the bourse, dropping to 16.7 per cent on Monday.

In the previous three weeks, total foreign investor participation in the market stood at between 55 and 62 per cent.

“Local institutions were out of the market leading foreign investors to account for 83.3 per cent of volumes,” said Standard Investment Bank in a note to clients after Monday’s trading.

The foreign investors have been placing their bets on the large cap counters, helping their prices upwards and raising the total valuation of the stock market.

Genghis analysts expect the accumulation by these investors to continue, leading to a gradual resurgence of equity turnover and share prices in the mid-term as the economic outlook for 2014 remains positive.

Volumes

The foreign investor activity in the market in the last three trading sessions has helped pick up the traded volumes following the lull in activity caused by the Christmas holidays.

The bourse closed 2013 on a high, with the NSE 20-Share Index at 4,926 points and the All-Share Index at 136 points, having recorded growth of 19 per cent and 44 per cent respectively during the year.

Equity turnover stood at an all-time high of Sh155 billion for the year, representing a rise of 80 per cent on the Sh86.79 billion in 2012 turnover.

A total of 7.6 billion shares were traded during the year, representing an increase of 40 per cent on the 5.4 billion traded in 2012.

The telecommunication & technology and banking sectors attracted the bulk of foreign demand on shares, with the former being the main market mover during the year, representing 52.7 per cent of the total traded volume at the bourse.

Safaricom saw four billion shares change hands at between Sh5 and Sh11.20, while the segment also saw the delisting of AccessKenya after a takeover by South African data firm Dimension Data.