Nairobi Securities Exchange (NSE) on the trading floor at the Exchange building in Nairobi on August 26, 2020. PHOTO | SALATON NJAU | NMG Foreign investors at the Nairobi Securities Exchange (NSE) slowed down their selling activity in January compared to the previous four months which were characterised by profit-taking on blue chip stocks.
NSE data shows that the investors made net sales worth Sh423 million last month, down from the Sh2.87 billion they sold in December 2021.
The last quarter of 2021 saw accelerated sales by the investors, pushing the total net outflows for the year to Sh10.24 billion.
The investors are however taking up stocks now in anticipation of better dividend payments tied to the 2021 financial year, especially among banks which are expected to announce record profits.
The waning threat of the Omicron strain of Covid-19 has also eased fears over the state of the economy, and the performance of companies in the current year, thus improving sentiment towards NSE stocks.
Analysts at investment bank AIB-AXYS expect demand for shares to remain healthy this month, particularly in sectors that promise good dividends.
“We expect investors to continue taking positions in the banking sector in anticipation of good 2021 financial year results which are likely to see a return to dividend payments,” said AIB-AXYS.
Foreign investors mainly trade the largest blue chip stocks, which have the necessary liquidity to support their large trades, and solid fundamentals that provide price stability.
Safaricom , EABL , Equity Group and KCB Group thus dominate the foreign trading desk.
In January, the four stocks accounted for 93.1 percent of the NSE’s total traded turnover of Sh8.2 billion, underlining their dominance of the market. They also account for 77 percent of the NSE’s market capitalisation of Sh2.63 trillion.
Foreign flows to emerging and frontier markets will however face headwinds going into the second quarter of the year if the US Federal Reserve goes ahead with plans to withdraw or scale down its pandemic stimulus programme, which would raise US rates. cmwaniki@ke.nationmedia.com
