Summary
- Foreign investors had turned net sellers last month compared to net buyers in January when net inflows amounted to Sh533.1 million.
- The outflows came against global market uncertainty amid the spread of the corona virus with the NSE indices continuing on a downward trend and the benchmark NSE 20 hitting a 16-year low last Friday.
- Analysis by Genghis Capital showed that foreigners have been net sellers for weeks, noting that the expectation was a downward market correction for the equities market in the first half of this year.
The Nairobi Securities Exchange (NSE) experienced increased
foreign selling pressure in February with net outflows for the month
topping Sh2.7 billion ($26.3 million).
Data from
Standard Investment Bank (SIB) showed foreign investors had turned net
sellers during the month compared to net buyers in January when net
inflows amounted to Sh533.1 million (or $5.3 million).
The
outflows came against global market uncertainty amid the spread of the
corona virus with the NSE indices continuing on a downward trend and the
benchmark NSE 20 hitting a 16-year low last Friday.
Among
the major contributors to the bear market is Safaricom – whose market
cap is nearly half of the total — which was 6.7 percent down last week
and 11.4 percent since the beginning of the year.
“The
benchmark indices sustained their downward momentum for the third
consecutive week, on protracted price downturns. Safaricom declined 6.7
per cent week-on-week and -11.4 percent year to date (YTD) to end the
week at Sh27.90,” said SIB. Last Wednesday alone, Safaricom shed nearly
5.2 percent to stand at Sh28.20 before falling further to Sh27.90 a
share.
Analysis by Genghis Capital showed that foreigners have been net
sellers for weeks, noting that the expectation was a downward market
correction for the equities market in the first half of this year.
The
investment bank noted that foreign investors were net sellers for the
third subsequent week posting net outflows of Sh300 million compared to
outflows of Sh1.3 billion in the previous week.
The NSE
20 Share Index, NSE 25, NSE All-Share Index were all down in the year
to date, showing that the correction was well under way. Even on month
and quarter to date, NASI was down indicating the extent to which the
bears rule the market.
“Our expectation [is] of a
downward market correction in the equities market during first half of
2020 …We are witnessing increased foreign selling pressure, with
occasional bouts of uncertainty,” said Genghis Capital in analysis this
week.
Genghis Capital noted further the prices of the
key counters were fluctuating between the resistance and support levels.
Support is the price level at which a downward trend pauses because
investors perceive it to be low enough to enter, thereby causing a rise
in demand at that point. The resistance level is that point where
investors have sold off to the extent that they can sell no more without
precipitating an increase in price.
Genghis said that
with the uncertainty, investors are tending to fluctuate between the
resistance and support levels on the key traded counters that have
continued to dominate the market for years now
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