Foreign investors sell off Sh37b stake in top firms

Foreign investors sold more than Sh37 billion worth of equity in the country’s leading listed companies as uncertainty around Covid-19 sent jitters through the market.

The latest market data indicates foreign investors sold significant shareholding in five leading listed companies - Safaricom, KCB Group, Equity Group, NCBA and East African Breweries (EABL) last year, increasing local shareholding in these firms. 

Foreign investors in KCB sold 255 million shares worth Sh9 billion between November 2019 and December 2020, shrinking their stake in the leading lender from 22 per cent to 14 per cent.

EABL similarly saw foreign shareholding fall from 28 per cent to 19 per cent over a similar period, as investors sold off 70 million shares valued at Sh10 billion.

The latest figures come on the back of a volatile trading season at the Nairobi bourse, with the Nairobi Securities Exchange (NSE)-20 share index losing Sh200 billion in market capitalisation in just one year.  

“The NSE-20 index closed the year at 1,868.39 points, a 29.6 per cent drop from the 2,654.39 points recorded at the beginning of the year, as local and foreign investors shifted their investments away from listed equity to other investments, seeking to mitigate against the declining value of their portfolios,” explained the Capital Markets Authority (CMA) in its latest industry report.

“During the year, net foreign outflow in the bourse was Sh28.63 billion compared to a net foreign inflow of Sh1.38 billion in 2019, as foreign investors exited,” explained the market regulator in its report.

Safaricom, which leads among listed firms in market capitalisation and share turnover, saw foreign investors sell 205 million shares valued at Sh7.3 billion, reducing foreign investor participation by 0.5 per cent.

NCBA and Equity recorded 219 million and 170 million shares sold off by foreign investors last year valued at Sh5.2 billion and Sh6 billion respectively.

The five firms account for 76 per cent of the NSE’s market capitalisation, and last year accounted for more than 93 per cent of the equity turnover recorded at the bourse.

CMA has in the past raised concern over the market concentration at the NSE that has risen from 85 per cent in 2019 to 87.6 per cent in 2020.

CMA said it is working on policy interventions to reduce barriers to entry on the NSE, and encourage more local enterprises and large family-owned businesses to list.