Foreign investors sell $18m worth of Kenyan stocks in three months
TLDR
- Despite gains in domestic exchange and improved investor sentiment, foreign investors continued to withdraw from Nairobi Securities Exchange in the first quarter of the year.
- Foreign portfolio flows remained negative throughout all three months with significant selloffs, notably in March amounting to Sh1.2 billion.
- Ongoing challenges persist in the Kenyan market, reflecting cautious behavior among foreign investors despite positive economic indicators.
Despite positive developments such as gains in the domestic exchange rate and improved investor sentiment fueled by the partial redemption of Kenya's debut $2 billion Eurobond, foreign investors continued to withdraw from the Nairobi Securities Exchange (NSE) throughout the first quarter of this year.
According to new market data, foreign portfolio flows remained negative across all three months, with the highest selloff observed in March amounting to Sh1.2 billion. In January and February, foreign investors withdrew Sh106 million and Sh1 billion from the market, respectively.
This trend highlights ongoing challenges despite some favorable economic indicators, indicating a cautious approach among foreign investors toward the Kenyan market.
Key Takeaways
The sustained exit of foreign investors from the NSE throughout the first quarter of the year, despite improved domestic economic indicators, has led to lower valuations and depressed stock prices. This creates attractive entry points for new investors seeking to capitalize on the market's potential. Moreover, with Kenyan stocks transitioning from being the worst performers globally in 2023 to leading performers in 2024, as indicated by the Nairobi All-Share stock index surging 48% in dollar terms, there is growing interest from global asset managers like BlackRock Inc. This trend underscores the perceived investment opportunities in Kenyan equities, further incentivizing new investors to enter the market.
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