Foreign investors’ NSE activity drops

Foreign investors’ participation at the stock market has declined for the third consecutive month as local investors edge them out.

According to the market report for May released by the Nairobi Securities Exchange, foreign investors accounted for 42 per cent of the total equity traded value last month down from 43 per cent in April.

In March and February, foreign investors accounted for 48 per cent and 56 per cent of the total equity traded value respectively, having risen from 45 per cent in January.

“Local investors have suddenly shown interest in the stocks because of the fact that the period under review is the results period, hence they are keen on counters that have announced impressive dividends,” business development manager at NIC Securities Samuel Gichohi said.

Last month, equity turnover increased by 63.05 per cent to a traded value of Sh16.07 billion, up from Sh9.85 billion that was traded in April.

Analysts say the market will witness continued robust activity given the current declining interest rates and the overall inflation rate that could allow local investors room to save and invest in securities.

In May, the overall rate of inflation stood at 4.05 per cent down from 4.14 per cent in April.

During its last meeting held in March, the Monetary Policy Committee of the Central Bank maintained the indicative lending rate at 9.50 per cent down from 11 per cent set in November last year.

According to Mr John Kamunya, the head of research at StratLink Africa Limited, surging share prices resulting from increased trading at counters which have posted growth in profits could also attract more trading by local investors.

“With the reporting season coming to an end, it is expected that the situation that has prevailed over the last few months will remain steady. However, any increase in share prices is bound to attract more local participation,” Mr Kamunya said.