According to market data compiled by Standard Investment Bank, foreign investors made record net sales of Sh29 billion from the Nairobi Securities Exchange (NSE) last year as the market was caught up in global capital flight back to the US.
“We expect the market to remain subdued in the near-term as international investors exit the broader emerging markets due to the expectation of rising US interest rates, coupled with the strengthening of the US dollar,” says Cytonn Investments in its latest market report.
Most of the capital outflow in the net outflow column, which is led by Safaricom at Sh13.7 billion, was centred on the large blue chips which are the favourite of foreigners due to their high liquidity that supports large ticket trades the SIB data shows.
The NSE has also been affected by falling share price valuations, which has negatively affected the dollar returns for investors — given that the shilling has remained largely stable against the greenback — causing investors to try book their gains and seek alternative investments.
Equity turnover stood at Sh175 billion last year having gone up by 2.4 per cent from Sh171 billion in 2017.
Foreign participation as a percentage of traded turnover at the bourse, however, remained unchanged year-on-year at 63 per cent.