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 Instability hit foreign investor confidence at NSE

 Instability hit foreign investor confidence at NSE
Nairobi Securities Exchange. PHOTO/Print

Political instability in the latter half of 2024 significantly impacted foreign investor activity at the Nairobi Securities Exchange (NSE), with trading participation dropping to 35.49 per cent from 52.21 per cent in November, according to data from the Capital Markets Authority (CMA).

The dip is attributed to capital outflows triggered by political uncertainty, prompting foreign investors to reduce their market exposure.

“The capital outflow is primarily attributed to the spillover effects of political instability experienced in the country during the second quarter of 2024, which may have prompted foreign investors to exit the market,” the report reads in part.

Despite the drop in participation, foreign turnover performance saw a slight increase, averaging 43.83 per cent compared to 42.07 per cent recorded in the third quarter of 2024.

The CMA report noted that foreign investors continue to play a dominant role in the Nairobi Bourse, with net foreign equity portfolio outflows rising sharply to Sh16.639 billion in Q4, up from Sh627.76 million in Q3.

Top blue-chip firms

The market concentration of leading blue-chip stocks, including Safaricom Plc, Equity Group Holdings Plc, East Africa Breweries Ltd (EABL), KCB Group, and Standard Chartered Bank Kenya Ltd, marginally declined to 64.24 per cent from 64.80 per cent.

This slight reduction suggests a shift among investors toward greater portfolio diversification beyond the traditionally dominant stocks.

Last week, the equities market recorded a notable upward trend, with the newly introduced NSE 10 index leading gains at 3 per cent. Other indices followed suit, with NSE 25, NSE 20, and NASI rising by 2.9 per cent, 1.8 per cent, and 1.3 per cent, respectively.

The positive performance was largely driven by gains in large-cap stocks, particularly EABL, KCB, and Diamond Trust Bank Kenya (DTBK), which surged by 7.2 per cent, 6.6 per cent, and 5.3 per cent, respectively.

While the political climate continues to weigh on investor confidence, the recent gains in key stocks indicate underlying resilience in the market, with some investors positioning themselves for potential recovery in 2025.maio con plita int et dolorunt verspe omnitat am ressitaqui videm fuga. Gitat et quaspiduciis debiti

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