Foreign investors withdrew Sh11.2 billion from the Nairobi Securities Exchange #ticker:NSE (NSE) in February and March, leading to a sharp fall in the value of blue chip stocks like Safaricom and Equity Bank Group.
The foreigners, who make up about 70 percent of daily trading at the NSE, turned into net sellers in the two months as part of a global sell-off during investors dumped stocks and sought shelter in fixed income assets, including government bonds.
A market summary for Quarter One compiled by the Standard Investment Bank (SIB) showed that foreigners pulled out Sh9.1 billion in March when the Coronavirus pandemic hit most countries outside China. Earlier in February, they had sold shares worth Sh2.76 billion, some of it as part of profit-taking.
Their net buying in January stood at Sh555 million when the market was expected to outperform last year.
Besides Kenya, investors have also been selling stocks in other markets including the United States, Japan, the United Kingdom and Australia.
Stocks favoured by foreign investors and which make up the NSE-20 share index like Safaricom #ticker:SCOM , Equity Bank Group #ticker:EQTY, EABL #ticker:EABL and Bamburi Cement #ticker:BAMB shed values in Quarter One, which ended March 31, slashing the value of shares at the Nairobi bourse by Sh523.9 billion in the three months to March.
The SIB analysis showed that Safaricom had the highest sell-off by foreigners (Sh4.9 billion) followed by KCB Group #ticker:KCB (Sh3.9 billion), Equity (Sh1.76 billion) and Co-operative Bank at Sh183.7 million.
Seven out of the top 10 net foreign outflow counters in March were banks — KCB, Equity, Stanbic, Cooperative #ticker:COOP, Absa Bank Kenya #ticker:ABSA, Standard Chartered Bank #ticker:SCBK and DTB #ticker:DTK.
Their combined foreign sales amounted to Sh4.2 billion.
Genghis Capital senior research analyst Churchill Ogutu said the NSE started the year on a high note but the plunge started in March when the first case of Coronavirus was confirmed.
“Stocks like KCB and Equity were partly affected by profit-taking in between but the last knock was Covid-19 fears which accelerated the fall,” he said.“Right now it is more about investor fears as opposed to fundamentals of respective companies.”At the NSE, the fears outweighed expectations of higher dividend payments for most companies whose financial year ended in December.Banks have announced their results with most increasing the amounts they intend to pay as dividends.KCB shares declined 35.2 percent in Quarter One to Sh35 while Equity Bank was down 36.5 percent to Sh33.95. Safaricom, […]