Foreign investors made net sales on the Safaricom #ticker:SCOM and EABL #ticker:EABL stocks at the Nairobi Securities Exchange (NSE) last week, pulling down the share prices of these stocks as well as the bourse’s market capitalisation.
The net outflows on the foreign desk — which accounted for 45.5 percent of total market turnover — stood at Sh843.4 million last week, reversing the net inflows worth Sh211.4 million recorded the previous week.
EABL led the market in net outflows at Sh509.6 million followed by Safaricom at Sh509.6 million. Due to the supply outstripping demand on these two counters, EABL’s share prices declined by 1.4 percent or Sh2.50 to Sh173.50, while Safaricom’s fell by 3.2 percent or Sh1.40 to close Friday at Sh41.80.
They were the major contributors to the Sh77.1 billion contractions in investor wealth at the market to Sh2.77 trillion.
The two stocks, alongside those of KCB and Equity Bank, account for 77 percent of the NSE’s total market capitalisation.
“Foreign investors veered from bullish to bearish with outsized exits in EABL and Safaricom while accumulating on KCB Group, Equity Group, and Jubilee holdings,” said Genghis Capital in a weekly market report.
All three market indices went red during the week, led by the NSE All-Share Index, which shed 2.7 percent to close Friday at 177.8 points.
The benchmark NSE 20 Share Index was down one percent to 2,039.8 points, while the NSE 25 Share index was down 2.5 percent to 3,918.5 points.
Going forward, eyes are on the actions of the US Federal Reserve to see when it starts tapering down its asset (bonds) purchase programme, popularly known as quantitative easing, which will raise rates on US securities and draw funds back into that market.
“Should the tapering process begin, we may witness reduced exposure in the Kenyan market by foreign investors as they become more confident in their home markets,” said analysts at Genghis.