(Bloomberg) — Kenya’s finance and agriculture industries have been the most resilient sectors during the coronavirus pandemic and are bound to receive the most flows when foreign-investor purse strings are loosened, according to George Asante, Absa Group Ltd.’s head of global markets for regional operations.
The East African nation’s health and education sectors will also attract increased attention after delivering products and services in innovative ways during recent months, Asante said in an interview.
The Nairobi Securities Exchange’s All-Share Index has dropped 16% year-to-date, with top gainers being agricultural producers Eaagads Ltd. and Sasini Ltd., while the laggards are Bamburi Cement Ltd. and advertising firm WPP Scangroup Ltd.
During the next investment selection cycle, investors’ key criteria will include the ease of trading and exiting markets, Asante said. “Investors are going to look at which sectors are going to emerge faster out of this crisis, and which ones are going to be the laggards.”
Foreign participation accounted for about 67% of stock trading on the NSE during the third quarter, from 65% in the previous three months, according to the markets regulator. It recorded net foreign portfolio outflows of 4.53 billion shillings ($41.6 million) in the third quarter, compared to 263 million shillings of inflows a year earlier.
“Kenya will continue to be a top-of-mind investment destination for foreign investors,” he said.
Asante said Kenyan market authorities should improve laws to encourage development of products that diversify the customer base into the informal sector and urged fund managers to target higher returns rather than using Treasury-bill rates as a benchmark.
Setting the right target will “force a lot of innovation in a very positive way so asset managers begin to think outside the box and begin to think about opportunities to create value,” Asante said.