Nairobi — Foreign investor outflows at the Nairobi Securities Exchange (NSE) have continued to increase as new Covid-19 variants saw foreigners exit the Kenyan market in 2021 due to uncertainties.
According to the Capital Market soundness report Q4 2021, net foreign equity outflows grew to Sh28.6billion in 2021 compared to Sh10.23billion recorded in 2020, a 179.61 percent increase.
The foreign outflows at the Nairobi bourse had slowed down at the beginning of 2021 but the momentum was slightly interrupted in November upon the announcement of the new Omicron variant.
The CMA bulletin noted that the variant news resulted in a 13.66 percent reduction in foreign investor participation in the equities market from October’s 64.83 percent to November’s 51.16 percent.
In the same vein, net foreign outflows were highest in November, at Sh4.3billion, accounting for 42.16 percent of net foreign outflows in 2021.
"Favorably, the month of December 2021 recorded improvements in trading for both metrics with foreign investor participation increasing to 57.20 percent and net foreign outflows reducing to Sh2.9 billion," the bulletin noted.
The bulletin noted that in the face of the pandemic, foreign investor outflows continue to pose a serious risk for the Kenyan capital markets further exasperated by the slow economic recovery witnessed in the domestic economy.
"The pandemic has forced jurisdictions to greatly invest in and support investments by domestic players. This plays a significant role in ensuring that capital flight by foreign investors does not expose markets to unnecessary runs," said Wyckliffe Shamiah, CEO, Capital Markets Authority.
Shamiah urged domestic institutional and retail investors to increase their participation in the domestic capital markets and increase their stake in capital markets instruments trading in Kenya.
In the quarter under review, foreign investor participation over the quarter was 57.99 percent, a 6.46 increase from the previous quarter.
Like China and the greater Asia, the Authority, through its investor education activities continues to encourage Kenyans to increase their savings levels and channel the same to capital markets instruments."With industry participants continually seeking to introduce investor-friendly products, it is our hope that every Kenyan can consider having a stake at the NSE to affirm the position of the Kenyan capital markets by domestic investors. It is however expected that over time, foreign investor participation should recover to prior levels," said Shamiah.