Foreign Investors Still Dominating Nairobi’s Equities Market

A derivative is an instrument that derives value from its underlying asset(s) which can be bonds, shares, currencies, or market indices.

Image I Courtesy NSE

The equities market continues to be dominated by foreign investors at the Nairobi Securities Exchange(NSE).  The week ending October 9, 2019, they accounted for 56.3% of the week’s total activity, compared to 74.5% in the previous week.

“Foreign investors were net sellers, reversing a three-week trend, logging net outflows of Ksh 38.1 million compared to a net inflow of Ksh 249.6 million in the previous week,” reported Genghis Capital, an  Investment Bank in Kenya.

During the week, the equities market recorded mixed performance with NASI and NSE 20 gaining by 0.3% and 0.7%, respectively, while the NSE 25 declined by 0.2%, taking their Year to Date (YTD) performance to gains/losses of 5.1%, (13.4%) and (1.5%), for NASI, NSE 20 and NSE 25, respectively.

The Central Bank of Kenya in its Weekly bulletin attributed the decline to “the short trading week” as a result of the Moi Day public holiday.

Net buying activity was largely on Safaricom, KCB Group and BAT Kenya while net selling activity was on Equity Group for the third consecutive week.  

Safaricom, Co-operative Bank, and Bamburi, gained by 1.4%, 0.4%, and 0.8%, respectively.

Genghis Capital anticipates activity to remain on the index counters with trading dominance by the foreign investors in the week.

Cytonn Investments, on the other hand,  states, “With the market trading at valuations below the historical average, we believe there is value in the market.”

The market is currently trading at a price to earnings ratio (P/E) of 11.2x, 15.7% below the historical average of 13.3x, and a dividend yield of 5.8% above the historical average of 3.9%.

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