Foreign investors pull Sh4.5b from NSE in Q3
by Noel Wandera
Foreign sell-offs in the equities market totalled Sh4.5 billion in the third quarter of 2020 compared to net purchases of Sh263 million in a similar period last year, Capital Markets Authority (CMA) says in latest report .
In its statistics bulletin for the 3rd quarter ended September, CMA Regulatory and Policy director Luke Ombara says turnover in the secondary debt market increased by 66.7 per cent to Sh227.8 billion same time last year.
This, even as shocks triggered by the Covid-19 pandemic continued to be felt during the quarter under review, despite the gradual opening up of the economy in August, with mixed performance witnessed in the key macro-economic indicators. “It is not a surprise in light of the Covid-19 pandemic,” says Churchill Ogutu, a senior research analyst at Genghis Capital. “We are not yet out of the woods,” he warned.
He adds it is worrying in a way because this exits push down the overall prices at the bourse as the foreigners sell off equity.
During the period under review, Ombara says the equity turnover stood at Sh37.9 billion, compared to Sh39.5 billion registered in the second quarter, a 4.02 per cent drop, confirming a slight decrease in trading activity at the bourse during the quarter.
He says end of quarter market capitalisation recorded a 2.06 per cent increase to Sh2,147 billion from Sh2,104 billion recorded in the second quarter, same to volumes of shares traded which during the period also increased by 42.15 per cent to 1,512.16 million in the third quarter compared to 1,063.81 during the same period last year.
Turnover in the bond market stood at Sh227.8 billion, compared to Sh185.4 billion registered in the period under review last year, registering a 22.88 per cent increase, Ombara adds.
In the primary treasury bonds market, the CMA quarterly analysis indicates that during the third quarter seven treasury bonds were issued to enable the government raise Sh180 billion but received subscriptions worth Sh364.92 billion.
The government accepted bonds worth Sh223.67 billion, indicating a 61.29 per cent acceptance rate.
“As at June 30, the total outstanding amount for corporate bonds was Sh28.86 billion,” says Ombara.
CMA says the secondary capital markets remained resilient, recording corresponding increases of 6.35 per cent and 2.06 per cent in the number of shares traded and market capitalisation, albeit a 4.02 per cent drop in the equity turnover.
The Nairobi Securities Exchange (NSE) All Share Index recorded a 1.61 per cent increase to close the quarter at 139.8 per cent, reflecting a general rise across all counters, while the NSE 20-Share Index recorded a 4.63 per cent decrease to close the quarter at 1,852.29, pointing to a drop in the prices of blue chip companies.
Data from the authority shows that foreign investors held 18 percent of the issued shares at the Nairobi bourse by the end of June, down from 20.9 percent in June 2019.