Foreign investors pull Sh11.6 billion from the NSE in two months

Investors have lost Sh173 billion on companies listed at the Nairobi Securities Exchange (NSE) in the last two months as the impact of the coronavirus pandemic continues to be felt across the world.

According to the latest market data from the Capital Markets Authority (CMA), the value of listed firms fell by 14.5 per cent from Sh2.36 trillion in March 2019 to Sh2 trillion registered at the end of March this year.

The numbers paint a worrying picture of the economic effects the virus will have on East Africa’s largest economy even as the government extended orders restricting movement.

According to the CMA report for the first quarter of this year, foreign investors pulled out Sh11.6 billion from the NSE in February and March as news of the global spread of Covid-19 prompted panic trading.

Market figures further indicate that trading at the exchange has fallen to the lowest level in 17 years in the wake of the virus.

In February, foreign investors dumped Sh2.6 billion worth of shares compared to Sh530 milllion that were bought the previous month.

With the country reporting its first coronavirus infection on March 13, investors dumped Sh9 billion worth of shares by the end of the month.

“The first quarter of 2020 recorded a net foreign portfolio outflow of Sh11.1 billion compared to an inflow of Sh601 million in the first quarter of 2019,” said CMA in the report.

“This drastic change can be attributed to the panic trading brought about by Covid-19.”

Overall market capitalisation - the value of listed companies at the bourse - has fallen from a high of Sh5.3 trillion in 2015 to the Sh2 trillion, values last recorded in July 2003.

The data paints a grim picture of the market that was already facing headwinds as several listed companies issued profit warnings over the past 18 months.

A significant 14 per cent of the 67 listed companies on the NSE were either suspended from trading or delisted in the last two years alone. Listed retailer Uchumi was singled out for failing to submit its shareholding statistics for February 2020 to the CMA as per statutory requirements.

Mobile service provider Safaricom was the most actively traded counter, with Sh15.7 billion worth of shares recorded in February and March, followed by KCB at Sh5.1 billion and Equity Group that traded Sh4.6 billion.