NSE foreign inflows rise on Kenyan equities appetite

A staff of the Nairobi Securities Exchange trading. FILE PHOTO | NMG 

By GEOFFREY IRUNGU
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Summary

• Net foreign flows rose to $5.27 million (Sh529 million) compared to a net outflow of $13.38 million (or Sh1.34 billion) in January last year and $13.76 million (or Sh1.38 billion) in January 2018.
• This underlines the change in foreign investors’ appetite for Kenyan equities in January compared to the same month in the past two years.
• However, the turnover was down by 18.4 per cent compared to the same month last year and by 38.3 per cent compared to the same month in 2018.

The Nairobi Securities Exchange (NSE) had net positive foreign flows last month compared to negative flows in similar months in the past two years even at a time its turnover was down.

Data from Standard Investment Bank (SIB) shows that net foreign flows rose to $5.27 million (Sh529 million) compared to a net outflow of $13.38 million (or Sh1.34 billion) in January last year and $13.76 million (or Sh1.38 billion) in January 2018.

This underlines the change in foreign investors’ appetite for Kenyan equities in January compared to the same month in the past two years.

However, the turnover was down by 18.4 per cent compared to the same month last year and by 38.3 per cent compared to the same month in 2018. This implies that businesses reliant on the size of the turnover including brokerage houses had relatively lower earnings during the month. The regulators of the industry — including the Capital Markets Authority, the NSE itself and the Central Depository Corporation — will also have lower income which is normally calculated as a percentage of the turnover.

The indices including the NSE 20, NSE All-Share Index (NASI) and NSE 25 were all down in January compared to positive performance in January last year and the same month in the previous year.

SIB data showed that the NSE 20-share index was down 2.0 per cent compared to 4.4 per cent increase in the same month in January last year and 0.7 per cent in 2018.

The decline in the indices was driven by large-cap stocks such as Bamburi

, Safaricom and Equity Bank

among the shares that pushed them down, an analysis by Cytonn Investments indicated.

“During the month, the equities market was on a downward trend with NASI, NSE 20 and NSE 25 decreasing by 2.6 per cent, 2.0 per cent and 1.9 per cent, respectively,” said Cytonn.

“The decrease recorded in NASI was driven by declines in large-cap stocks such as Bamburi, Co-operative Bank

, Equity Group and Safaricom, which recorded declines of (9.4 per cent), (6.7 per cent), (6.5 per cent) and (3.3 per cent), respectively.” A big portion of the reduction in the performance was a result of last week’s falls in several large-cap stocks.