Kenya’s capital markets continued to suffer from capital flight in the second quarter of this year as foreign investors pulled back from risky markets. According to the Capital Markets Soundness Report Q2 2021, foreign investor outflows from the Nairobi Securities Exchange rose to KSh2 billion in the three months from April to June 2021, up from an outflow of KSh 976 million from January to March.
Average foreign investor participation declined to 58.7% in the second quarter, compared to 60.4% in the first quarter of this year. As per the CMA report, the dip in foreign investor participation could be linked to profit-taking after the first quarter’s dividend book closure.
CMA noted that market concentration remains a major risk within the Kenyan market. The Capital Markets Authority, the Nairobi Securities Exchange, and the Privatization Commission continue to push for the privatization of some big state-owned corporations which would help reduce this concentration risk which has been there for years.