Foreign investors in August turned net buyers for the first time since January at the Nairobi Securities Exchange (NSE), indicating increased confidence in blue chips such as Safaricom and selected tier one banking stocks that have reported higher profits.
NSE data shows that net foreign inflows stood at Sh1.72 billion in the month, the first net buying position since January’s Sh621 million.
They also raised their share of traded turnover to 56 percent from 50 percent in July.
The higher appetite for local stocks is attributed to payments of interim dividends and increased net profits in the first half period by companies, which promises a healthy full year payout for investors.
“Some counters have made specific moves, giving them a positive momentum and have made investors want to hold positions. Safaricom, for example, in late July received the final licence on Ethiopia entry,” said Churchill Ogutu, the head of research at Genghis Capital.
“The dividend announcements and half-year performance are lowering risk sentiment allowing investors to take comfort in buying.”
Genghis Capital analysis shows the Safaricom stock led the market with net inflows of Sh2.7 billion, followed by Equity Bank (Sh324.8 million), Absa Kenya (Sh33.3 million), Co-operative Bank (Sh18.5 million) and Kenya Re at Sh1.2 million.
Foreign investors were net sellers on EABL at Sh1 billion, BAT Kenya (Sh123.9 million), StanChart (Sh83.1 million), KCB Group (Sh80 million) and Bamburi at Sh73.6 million.
Despite the turnaround in August, however, foreign investors still hold an overall net selling position for 2021, albeit at a much reduced scale compared to last year.
In the first eight months of 2021, net sales stood at Sh3.28 billion, down from Sh26.8 billion in the corresponding period in 2020.
The sharp fall bodes well for the NSE, which has in recent years struggled to record gain in valuations due to selloffs and rush to profit taking whenever a stock made capital gains.