BAT, Equity lift foreign inflows at the NSE

MONEY MARKETS

A staff of the Nairobi Securities Exchange (NSE) take notes at the bourse. PHOTO | SALATON NJAU 

By CHARLES MWANIKI, cmwaniki@ke.nationmedia.com

IN SUMMARY

• The market had net foreign inflows of Sh932 million last month, compared to net outflows of Sh1.12 billion in July.
• The return of foreigners to a positive inflow position has provided a measure of support to the bearish market, buoying it above the 4000 points mark.
• Most of the foreign investor activity in August was concentrated on the BAT Kenya and Equity Holdings counters.

Foreign investors turned net buyers in the stock market in August halting five months of net outflows that have contributed to the main index falling to its lowest level since the end of December 2012.

Market data compiled by Standard Investment Bank (SIB) show the market had net foreign inflows of Sh932 million last month, compared to net outflows of Sh1.12 billion in July.

The return of foreigners to a positive inflow position has provided a measure of support to the bearish market, buoying it above the 4000 points mark.

The NSE 20 share index shed only 5.2 per cent in August, compared to July when it dropped 10.2 per cent.

Most of the foreign investor activity in August was concentrated on the BAT Kenya andEquity Holdings counters.

“This (net inflow position) could have been driven by the release of mid-year results, notably from the banking and finance sector, and the significant tightening of liquidity (with the interbank rate crossing the 20 per cent mark) that signals heightened effort to stem the slide of the shilling which was undermining the dollar value of portfolio held by foreign investors,” said research firm Stratlink Africa in its September 2015 market outlook note.

Foreign investor participation was at nearly 80 per cent in August, compared to 70 per cent in July and 46 per cent at the beginning of the year.

According to the SIB data, BAT attracted the highest net inflows at Sh683 million, followed byLiberty Holdings at Sh224 million, Kenya Re at Sh197 million and NSE Sh119 million.

On the net outflow column, Equity led with Sh523 million, followed by Bamburi Cement at Sh78 million and Safaricom at Sh58 million.

Overall year-to-date, the market retains a net outflow position at Sh5.89 billion, having seen the highest rate of capital flight in March and May.

Analysts expect some volatility in the run-up to the end of the year in terms of foreign activity, with an uncertain international financial market weighed against bargains in the local market, with blue-chip counters at rock bottom.

According to Old Mutual Securities analysts, investors are eyeing some value stocks in the banking segment, which having lost 21 per cent year-to-date, are once more emerging as an attractive entry point into the market.

“Going by the current trend, chances are that we shall see volatility in foreign activity. A number of stocks are highly discounted, and funds may be looking at making long-term investments now,” said Old Mutual analyst Eric Munywoki.

“Macroeconomic factors such as the weak currency are however a concern. A weak but stable shilling would encourage inflows, but if the currency then keeps weakening the investors would worry about losing the value of their investments.”

He added that investors are also keeping a keen eye on the decision of the US Federal Reserve later this month on whether or not to raise US interest rates, and also the Chinese economy that has shown signs of slowdown.