Kenya’s stock market has become increasingly profitable for foreign investors, with the annualised dollar-adjusted return on the 15 largest companies rising to 29.5 per cent from 7.1 per cent three months ago.
The latest African Alliance analysis of African bourses shows the dollar return on the FTSE NSE 15 index — which tracks the 15 largest listed firms by market capitalisation — is higher than that of the NSE peer bourses of Nigeria (19.7 per cent), Morocco (13 per cent) and Tunisia (9.4 per cent).
Share prices at the stock exchange have gone up in recent weeks — and with the shilling also starting to gain on the dollar, foreign investors are bound to earn more upon conversion of their sales proceeds to hard currency when exiting a stock.
As a result of the higher share prices the foreign investors have been net sellers on the market for the past two months, booking profits on stocks they had accumulated during the two-year bear run.
“The average weekly value traded in the last six months is Sh3.5 billion ($33.8 million).
The FTSE NSE Kenya 15 is up 30.4 per cent year-to-date (29.6 per cent US dollar),” said African Alliance in its latest Africa weekly report.
Higher than JSE
The NSE index’s dollar return is also higher than that of the Johannesburg Stock Exchange, which stood at 14 per cent last week.
It, however, trails Zimbabwe stock exchange’s 47.5 per cent, although the country uses the dollar as part of its basket of official currencies.
Should the trend be sustained, the higher returns on offer in Kenya would be expected to act as a catalyst to attract back strong inflows into the market, once the investors taking profit take a back seat.
Local investors have also returned to active trading at the NSE, having kept in the background during the past two-and-a-half years when stock valuations were plummeting.
The NSE’s overall traded turnover in the first half of the year rose 11.4 per cent to Sh82 billion compared to the same period in 2016, with the NSE All share index 26.5 per cent up since January.