Foreign investors at NSE pull out Sh1 billion in July

A stockbroker at the Nairobi Securities Exchange trading floor. FILE PHOTO | NMG

By PATRICK ALUSHULA
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Summary

• Foreign investors pulled out Sh1.09 billion from the Nairobi Securities Exchange (NSE) in July, marking the sixth straight month of net-selling despite the prevailing rise in the market wealth.
• Data by trading and corporate advisory firm AIB-AXYS shows that the foreigners bought shares worth Sh4.67 billion but sold others valued at Sh5.75 billion during the review period.

Foreign investors pulled out Sh1.09 billion from the Nairobi Securities Exchange (NSE) in July, marking the sixth straight month of net-selling despite the prevailing rise in the market wealth.

Data by trading and corporate advisory firm AIB-AXYS shows that the foreigners bought shares worth Sh4.67 billion but sold others valued at Sh5.75 billion during the review period.

The July performance means foreign investors have now pulled out Sh4.69 billion from the NSE since February, despite the market capitalisation surging by Sh262.94 billion in six months.

Foreign investors’ weekly participation also came down to 50.7 percent from 61.6 percent in the previous week.

“This net-selling is partly due to profit-taking as they (foreign investors) reduce their trading volumes in their markets as well as in the emerging and frontier markets,” said Churchill Ogutu, Genghis Capital senior research analyst.

“Being summertime on their end, foreign investors tend to slow their activities in July and August. They are likely to come back in full throttle come September.”

The six-month net selling is, however, a cool-off from the Sh27.3 billion that foreigners had pulled out of NSE in the same period last year as investors dumped equities in search of shelter in fixed income assets.

The focus will now shift on the kind of earnings that firms across sectors will release since this, together with boards’ plans, usually has a bearing on the share prices.

The earning season set in last week with firms such as East African Breweries announcing results.

Banks will this month release their half-year results, with their performance tipped to influence the counters that local and foreigners will be picking come September.

There have been signs of recovery on the NSE as the economy recoups the losses caused by the Covid-19 pandemic, even though the majority of the gains are concentrated among a few large blue-chip counters.