Foreign investors drop Ksh.1.9 billion NSE stocks in five months


Foreign investors drop Ksh.1.9 billion NSE stocks in five months
A display of listed equities at the NSE. PHOTO | CITIZEN DIGITAL

In Summary

  • In May, the investors offloaded Ksh.787.7 ($7.3 million) worth of stocks as investors continued to execute a flight to risk stance to cushion against continued volatility in the local macro-economic scene.
  • The performance of the NSE however continues to look up after the free fall witnessed at the onset of the pandemic last year.
  • All three NSE primary indexes for instance are in the positives having recorded gains of 1.9 per cent (NSE 20), 11.7 per cent (NASI) and 8.3 per cent (NSE 25).

Foreign investors have now sold stocks worth Ksh.1.9 billion ($17.5 million) at the Nairobi Securities Exchange (NSE) in the year so far.

In May, the investors offloaded Ksh.787.7 ($7.3 million) worth of stocks as investors continued to execute a flight to risk stance to cushion against continued volatility in the local macro-economic scene.

The performance of the NSE however continues to look up after the free fall witnessed at the onset of the pandemic last year.

All three NSE primary indexes for instance are in the positives having recorded gains of 1.9 per cent (NSE 20), 11.7 per cent (NASI) and 8.3 per cent (NSE 25).

With the Nairobi All Share Index (NASI) marking gains into the double digits across five months to May, this puts at par NSE returns to other investment classes such as Treasury bills (T-bills) and money market funds.

Gains in large cap stocks including Safaricom, EABL, Absa, KCB and Equity Group have anchored the returns for the NSE amidst continued volatility.

At the same time, market performance indicators reveal a much improved view of the bourse.

For instance, the market currently trades at a price to earnings ratio 14.5x, 12 per cent above the historical average ratio of 12,9x.

Similarly, the markets price to growth ratio (PEG) sits at 1.6x, an indication that the market is trading at a premium to its future earnings growth.

This also implies that the NSE is overvalued.

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