There has been a drop in foreign investors at the Nairobi Securities Exchange as more capital shifted abroad. PHOTO | FILE The declaration led to a decrease in foreign investor participation by 13.66 percent, and a subsequent net outflow of $37 million, accounting for 42.16 percent of total net foreign outflows in 2021.
In the quarter under review, NSE launched day trading, allowing stock traders to buy and sell securities within a single day or multiple times in a trading session, in order to improve market liquidity, turnover, investor participation in the market and revenue collection.
The CMA also issued guidelines on share buybacks, to raise investor confidence in the markets by boosting protection and orderliness.
The Nairobi Securities Exchange registered a net foreign equity outflow of $44 million in the last quarter of 2021 from $8.2 million in the previous quarter, warranting a "high" risk level rating by the Capital Markets Authority (CMA), in the Capital Market Soundness Report Q4 2021 released on Monday.
The CMA attributed this development to the interruption caused by the announcement of the Omicron variant last November.
The declaration led to a decrease in foreign investor participation by 13.66 percent, and a subsequent net outflow of $37 million, accounting for 42.16 percent of total net foreign outflows in 2021.
"The higher net foreign outflows in November 2021 were mainly due to exits from Safaricom due to the political situation in Ethiopia, and jitters during the initial days of the Omicron variant. We don’t anticipate additional substantial risk from both situations," said Lisa Kimathi, senior associate for research at Standard Investment Bank in Nairobi.
"An increase in outflows in one quarter does not translate to a trend. Net foreign outflows increased in November 2021, but declined the following month, with a further reduction in January 2022," she added. Global developments
"The historical data is not a concern, but we are watching upcoming global developments, which could incentivise foreign investors to increase capital allocation in developed markets over frontier markets," Ms Kimathi told The EastAfrican .
To mitigate the risk of net foreign outflows, CMA has embarked on a campaign to improve domestic participation and investment among Kenyans, mainly through investor education.
"A key lesson learnt in this season is the importance of having deep and efficient capital markets with maximum participation by domestic investors, both institutional and retail," Wycliffe Shamiah, the CMA chief executive, said at the release of the […]