NAIROBI | According to an analysis of data from the Capital Markets Authority (CMA), foreign investors have sold over four billion shares on the Nairobi Securities Exchange (NSE) in multi-year selloffs.
This has led to a more volatile bourse and low stock prices. Multiple adversities, including the Covid-19 pandemic, interest rate jumps, and the foreign exchange rate crisis, have been traced as the reasons for the liquidation of foreign holdings.
NCBA Group has seen the sharpest drop in foreign investors’ holdings, while other leading counters have also experienced sharp liquidation in foreign ownership.
Local institutional and individual investors have stepped in to purchase the disposed of shares. However, the exit of foreign investors is seen as detrimental to the market as offshore participants are seen as the price driver for the bourse.
While local investors largely buy and hold stocks, foreign investors keep restructuring their portfolio, which is negative for the NSE as it contributes to high volatility in the market.
Furthermore, a lack of new investment opportunities in the bourse and Kenya’s foreign exchange woes have accelerated the exits by foreign investors.
