Foreign investors turn sellers at the Nairobi exchange

The Nairobi Securities Exchange trading floor. FILE PHOTO | NMG 

By CHARLES MWANIKI
More by this Author

Summary

• Market data shows the non-locals made net sales of Sh1.3 billion last week, compared to net buys of Sh501 million the previous week.
• This was largely due to those cashing in on the Safaricom stock, which had risen above Sh30 two weeks ago before dropping back to Sh28.50 last Friday.
• The net foreign sales on Safaricom’s stock last week stood at Sh705 million.
• Other stocks that recorded net foreign sales last week include Absa (Sh211.4 million), Equity Holdings (Sh135.7 million), BAT Kenya (Sh83.5 million) and EABL (Sh61.2 million).

Foreign investors turned to profit-taking on key counters at the Nairobi Securities Exchange (NSE) last week, pushing the market to reverse the gains made in the previous week.

Market data shows the non-locals made net sales of Sh1.3 billion last week, compared to net buys of Sh501 million the previous week, largely due to those cashing in on the Safaricom

stock, which had risen above Sh30 two weeks ago before dropping back to Sh28.50 last Friday.

The company closes its books for a Sh1.40 a share dividend on July 31, which will likely bring heightened activity on the counter in the next few weeks as investors jostle for a slice of the payout, while others eye capital gains occasioned by the higher demand.

“Profit-taking took centre stage mostly by foreign investors concentrating on Safaricom.

“The general market exuded bearishness in close reflection to global equity markets during the week which saw rising Covid-19 cases in countries such as India and US, as risks of a wave two cycle of the pandemic rises,” said investment bank Genghis Capital in a weekly market report.

The net foreign sales on Safaricom’s stock last week stood at Sh705 million.

Other stocks that recorded net foreign sales last week include Absa

(Sh211.4 million), Equity Holdings (Sh135.7 million), BAT Kenya (Sh83.5 million) and EABL

(Sh61.2 million).

Overall, the NSE 20 Share Index ended last week 1.6 percent lower, while the NSE All-Share Index was down 4.7 percent.

Market capitalisation was down by Sh104.6 billion to close Friday at Sh2.11 trillion, largely due to the retreat in Safaricom’s share price.

Due to the current depressed prices seen at the bourse, dividends have emerged as an attractive selling point for shares, with the yields higher than buying prices.

However, some firms, especially banks, have reduced or done away with the cash pay-outs to preserve capital, with some offering shareholders the alternative of bonus stock.

This, therefore, means that shares of companies that are going ahead with their dividend pay-outs are likely to attract higher demand.