Foreigners pull $11m from NSE counters over Covid-19 jitters

A trader at the Nairobi Securities Exchange (NSE) trading floor on August 26, 2020. PHOTO | SALATON NJAU | NMG

Summary

• The net selling by foreign investors in October was a contrast from August and September where net buying of Ksh10 million ($100,000) and Ksh802 million ($8.02 million) was recorded respectively.
• Bank stocks such as KCB, Equity and Absa and other large firms like Safaricom and East African Breweries dominated the list of top stocks that featured most in net foreign selling charts.

By PATRICK ALUSHULA

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Foreign investors on Nairobi Securities Exchange (NSE) turned net sellers in October, withdrawing

Ksh1.13 billion ($11.3 million) on increased risk aversion due to a surge in Covid-19 infections and deaths, halting two months of net buying.

AIB-AXYS Africa data shows that sales by foreign investors surpassed purchases for most days of October, with banking stocks and Safaricom being the most affected.

The net selling by foreign investors in October was a contrast from August and September where net buying of Ksh10 million ($100,000) and Ksh802 million ($8.02 million) was recorded respectively.

Coincidentally, August and September were the only months where net buying by foreign investors was reported since February.

RISK AVERSE INVESTORS

AIB-AXYS Africa head of research Sarah Wanga linked the October net selling to the increased risk aversion and the reduced attractiveness of equities as Covid-19 abyss continues to batter the fundamentals of many companies.

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“Foreign investors are generally staying away from emerging and frontier markets. There seems to be an increased risk aversion,” said Ms Wanga.

“August and September net buying was mainly due to attractive prices in the banking sector. Prices really fell in weeks that followed the release of half year results presenting attractive opportunities.”

October saw foreigners turn net buyers for only five trading sessions but the amounts involved were significantly lower.

Bank stocks such as KCB, Equity and Absa and other large firms like Safaricom and East African Breweries dominated the list of top stocks that featured most in net foreign selling charts.

The trend has persisted in the first week November, with Ksh330 million ($3.3 million) net selling posted between Monday and Wednesday.