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Foreign Investors Outflows Increase at the Nairobi Bourse in Q4 2021 -CMA

Foreign investor at the Nairobi Securities Exchange (NSE) have continued to decrease as the onset of the Omicron variants saw them exit the Kenyan market in 2021 due to uncertainties.

The foreign outflows at the Nairobi bourse had slowed down at the beginning of 2021 however, the momentum was slightly interrupted in November upon the announcement of the new Omicron variant.

According to the Capital Market soundness report Q4 2021, net foreign equity outflows grew to Sh28.6 billion in 2021 compared to Sh 10.23 billion recorded in 2020, a 179.61 % increase.

The CMA bulletin noted that the variant news resulted in a 13.66 percent reduction in foreign investor participation in the equities market from October’s 64.83 percent to November’s 51.16 percent. Consequently, net foreign outflows were highest in November, at Sh4.3 billion, accounting for 42.16 percent of net foreign outflows in 2021.

“Favorably, the month of December 2021 recorded improvements in trading for both metrics with foreign investor participation increasing to 57.20 percent and net foreign outflows reducing to Sh2.9 billion,” the bulletin noted.

The bulletin noted that in the face of the pandemic, foreign investor outflows continue to pose a serious risk for the Kenyan capital markets further exasperated by the slow economic recovery witnessed in the domestic economy.

“The pandemic has forced jurisdictions to greatly invest in and support investments by domestic players. This plays a significant role in ensuring that capital flight by foreign investors does not expose markets to unnecessary runs,” said Wyckliffe Shamiah, CEO, Capital Markets Authority.

Shamiah urged domestic institutional and retail investors to increase their participation in NSE and increase their stake in capital markets instruments trading in Kenya.

In the quarter under review, foreign investor participation over the quarter was 57.99 percent, a 6.46 increase from the previous quarter.

The Authority, through its investor education activities continues to encourage Kenyans to increase their savings levels and channel the same to capital markets instruments.

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