Morose since April, the Kenyan financial market is pulled down by the massive disengagement of foreign institutional investors.
A “frontier” market, the Nairobi Stock Exchange has two main characteristics attached to these financial centers in the making: significant growth potential and … a strong downward volatility. An erratic performance that investors positioned on Kenyan listed stocks rediscover, despite themselves: main index of Nairobi, the Nairobi All Share Index (NASI) begins its third consecutive month of decline since its highs in April. In May alone, it sold nearly 4%. A counter-performance that is nevertheless incommensurable with the defeat observed (-11%) over the same period by the NSE 20 Share Index, the index following the top twenty Kenyan securities (EABL, Equity Bank, KCB, Barclays Kenya , Safaricom …).
To explain this disinterest in the stock market, the Standard Investment Bank (SIB), in its latest market study, notes that “foreign investors have been net sellers of more than 4 billion shillings ($ 40 million). in the month of May, leading to an erosion of the major indices […] “. As a result, over the past period, the stock market valuation of Kenyan stocks has evaporated by more than 95 billion shillings ($ 945 million).
Analysts at the firm Cytonn Investments, quoted Tuesday by our colleague Business Daily, abound in the same direction when they point out that there was “a strong selling pressure exercised by international institutional investors, the latter having disengaged of the market after the end of the season of the divends “, which would run precisely until May. More, “this decline occurs in a context where the volume of transactions is significantly increased (18.4 billion shillings exchanged in May, against 15.1 billion in April), a sign of heavy downward movements,” decrypts Olivier Muneza, broker at MBEA Brokerage.
For Cytonn Investments, however, this would be a normal and temporary profit taking, as most investors have moved out of their positions at the top of the cycle, with the possibility of re-entering the future at a higher valuation level. weak, “concludes the company in its note. Relative optimism not shared by all market operators. “Since April, it is almost 15% valuation that have been lost,” recalls Isidore Mutabazi, financial analyst at CDH Capital in Kigali, for whom “we can fear a beginning of the bear market, brightened by the current increase economic uncertainty “.
By Jacques Leroueil, correspondent for Kigali.
Stock market evolution of Nairobi All Share Index since April 1, 2018
Source: Bloomberg
Total market capitalization of the Nairobi Stock Exchange as at 1 April 2018:
2893 billion shillings ($ 28.6 billion)
Total market capitalization of the Nairobi Stock Exchange as at June 5, 2018:
2546 billion shillings ($ 25.2 billion)
% Change over the period: – 11.99%
Source: Nairobi Securities Exchange
