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Foreign investors are beginning to lose faith in Kenya’s stock market

Foreign investors' withdrawal from the Nairobi Securities Exchange decreased by Sh320 million in the three months to September 2023.
Nairobi Securities Exchange
Nairobi Securities Exchange

Foreign investors withdrew Sh1.18 trillion between July and September 2023, a decrease from the Sh1.5 billion reported in the second quarter of the year.

Only two positive inflows have been observed in the past six months.

The Capital Markets Authority noted that the decrease points to a promising trend in which international investors are progressively restoring faith in the market.

Kenya's top five listed firms on the Nairobi Securities Exchange (NSE) suffered a total decrease in market capitalization of Sh101 billion from July to September. 

According to CMA statistics, the average market turnover provided by the top five companies by market capitalization, Safaricom Plc, Equity Group Holdings Plc, East African Breweries Ltd, KCB Group Plc, and the Cooperative Bank, was 65.41 percent, or Sh1.019 trillion, overall.

This is a nine percent (Sh101 billion) decrease from the five's 67.8% turnover (Sh1.12 trillion) from the preceding second quarter, which ended in June 2023.

The decline has been attributed to foreign investors pulling their money out of the exchange in pursuit of more secure assets, owing to the Kenyan shilling's depreciation.

This indicates that these five stocks saw a larger value decline during the quarter than the stock market, making them the most prominent victims of investor sell-offs, particularly when compared to smaller stocks that have somewhat withstood market volatility.

The Nairobi Stock Exchange was named the least-performing African exchange in dollar returns for the first nine months of the year.

Concerns about a lack of dollars in the nation challenges getting short-term loans to support their working capital, limitations on capital repatriation, and the high cost of doing business have been raised by foreign investors.

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