Foreign investors’ return lifts bourse turnover 46pc

Money Markets

 

A Nairobi Securities Exchange worker on the trading floor. Net foreign inflows hit Sh2.3 billion at the NSE. Photo/FILE 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

In Summary

• Data from the Standard Investment Bank shows foreign investors net inflows grew for the second month, an increase of 64 per cent on April’s net inflows of Sh1.4 billion.

The return of foreign investors to the Kenyan stock market accelerated in the past month with net foreign inflows hitting Sh2.3 billion, helping push market turnover up 46.2 per cent.

 

Data from the Standard Investment Bank shows foreign investors net inflows grew for the second month, an increase of 64 per cent on April’s net inflows of Sh1.4 billion.

The bourse had seen net outflows in all the first three months of the year, with selling mainly on big cap counters that pointed to profit taking. Total market turnover for the May increased as a result, touching Sh23.6 billion, up from Sh15 billion in April.

According to analysts, foreign investors have been turning their focus on frontier markets in preparation for new monetary easing policy in the Eurozone that will see deposit rates slashed and long-term refinancing operations initiated.

“With the Eurozone expected to delve into monetary easing measures, the local market received much inflow as the European markets stagnated,” said analysts at Genghis Capital.

In May, the investors took overall buying positions on the big cap counters, with East Africa Breweries Ltd, Kenya Commercial Bank and Equity Bank leading stocks in foreign inflows during the month.

EABL net inflows stood at Sh1.9 billion, with KCB at Sh1.2 billion and Equity at Sh475 million in May.

On the net foreign outflow column, Safaricom led with Sh827 million, while cement manufacturers Bamburi and Athi River Mining (ARM) saw outflows of Sh220 million and Sh211 million respectively.

Kenya has been attracting increased direct foreign investment, ranking second only to Ghana. The country’s FDI average growth between 2007 and 2013 was 40 per cent while Ghana’s stood at over 50 per cent in the same period.

“With the three key pillars of increased FDI well aligned in Kenya— investable natural resources, government privatisations/public private partnership opportunities and access to an expanded regional consumer market, we expect investment flows to increase,” said Standard Investment bank in a market summary note.