War in Middle East triggers foreign investor flight at NSE

Foreign investors continued with the selling spree at the Nairobi Securities Exchange (NSE), with their activities dropping to 35 per cent from 40 per cent in the previous week.

Weekly data by NSE shows that foreign investor activity remained a key drag on the market, with net outflows widening significantly to Sh119.6 million compared to Sh15.01 million in the prior session, underscoring continued external selling pressure.

Foreign buys dropping to Sh59.6 million and foreign sales rising to Sh178.3 million, amplified the net outflow position

Analysts attributed the trend to the ongoing war in the Middle East between the US and Israel against Iran.

“Foreign traders normally retreat to stable markets, while others sell and hold funds in case of uncertainty. The ongoing war has hit hard the global energy and there is a possibility of a recession, worse than 2008,’’ capital markets analyst Kibet Maiyo told the Star.

Nevertheless, the Nairobi bourse showed a notable uptick in the week ended March 19, with total equity turnover increasing by 49.3 per cent to Sh569.83 million, up from Sh381.65 million recorded in the previous session. 

This surge in trading activity reflects a heightened participation by local investors, powered by Safaricom’s Ziidi App, despite the prevailing downward trend in prices.

On the equities performance front, Olympia Capital Holdings led the gainers’ chart with a 4.6 per cent growth to close at Sh7.80.

Home Afrika Limited, Express Kenya Plc, BK Group Plc, and Satrix MSCI World Feeder ETF, which posted gains ranging between 1.9 and 2.4 per cent, followed it

These gains highlight selective investor interest in mid- and small-cap counters.

Conversely, the losers’ segment was led by Eaagads Limited, which declined sharply by 4.4 per cent.

Other notable losers included Equity Group Holdings, KCB Group, Standard Group PLC, and Limuru Tea Plc, all of which recorded losses exceeding two, reflecting broad-based selling pressure across multiple sectors.

The Nairobi All Share Index (NASI) closed the trading session on a weaker footing, reflecting subdued investor sentiment during a shortened trading week ahead of the Iid ul-Fitr holiday.

The benchmark index declined by 0.9 per cent to settle at 209.42 points, weighed down primarily by losses in key large-cap stocks.

Equity Group Holdings, KCB Group, East African Breweries Limited, and Safaricom PLC all registered declines of 3.2, 2.9, 0.5, and 0.5 per cent, respectively, exerting significant downward pressure on the overall market performance.

A broader look at market indicators reveals a general decline across key indicators.

Market capitalisation edged lower by 0.9 per cent to Sh3.5 trillion, while the NSE 10 Index, NSE 20 Index, and NSE 25 Index fell by 1.3 per cent, 0.7 per cent, and 1.2 per cent, respectively.

Despite the bearish tilt, some counters recorded gains, such as BK Group Plc, British American Tobacco Kenya, and Nation Media Group, which rose by 2%, 0.9%, and 0.3% respectively, providing partial support to the market.

These advances, however, were insufficient to offset the broader declines experienced among blue-chip stocks.

KCB Group emerged as the most actively traded stock, recording a turnover of Sh115.31 million.

It was followed by Safaricom PLC, which posted a turnover of Sh106.15 million, reinforcing its dominant position in market liquidity and investor focus.

In the money markets, the Treasury bill auction of March 19 received bids totalling Sh35.3 billion against an advertised amount of Sh24 billion, representing a performance of 146.9 per cent.

Interest rate on the 182-day and 364-day Treasury bills declined while interest rate on the 91-day Treasury bill increased marginally.

During the week, the Treasury bond switch auction of March 16, the 15-year Treasury bond received bids totalling Sh22.2 billion against an advertised amount of Sh15 billion, representing a performance of 148.1 per cent.

Bond turnover in the domestic secondary market decreased by 21.46 per cent to Sh62.6 billion from Sh79.7 billion the previous week.