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Kenya’s bourse continues its slump


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The market capitalization has been on a downward trend since 2014

By Antony Mutunga

The Nairobi Securities Exchange (NSE) has faced one of its worst periods in the last five years as foreign investors flee the Kenyan market. The bourse, which recorded a significant loss in 2022, has yet to recover to the start of 2023. In the first quarter of 2023, the average foreign investors’ participation decreased from 54.84 percent in the last quarter of 2022 to 41.24 percent.

Data from the Capital Markets Authority (CMA) also highlights that in March 2023, foreign investment participation decreased by 13.60 percent to 30.10 percent compared to March 2022, which stood at 47.89 percent. This has been attributed to the dip in share prices for most NSE-listed firms that have worsened. The net foreign portfolio outflow increased from Sh1.69 billion in Q1 2022 to Sh13.93 billion in Q1 2023.

The end period market capitalization also recorded a 27.59 percent decrease from Sh2,43 trillion in Q1 2022 to Sh1.76 trillion in Q1 2023. The market capitalization has been on a downward trend since 2014. Last year, foreign investors managed to sell off shares worth Sh63.21 billion from the Kenyan stock market, citing escalating global risks according to the CMA.

Leading firms in the bourse, such as Safaricom, Equity Bank, Kenya Commercial Bank, and Co-operative Bank of Kenya, all recorded share price devaluation causing foreign investors to lose trust in the stock market. For instance, Safaricom, representing the largest stock at the NSE by average market capitalization, decreased by 36.4 percent of its value to close 2022 with a share price of Sh24.15 from a closing price of Sh37.95 a year earlier. Others, such as Equity, KCB, and Co-operative, shed 15.6 percent, 16.2 percent, and 5 percent of their share prices.

According to Solomon Kariuki, stockbroker AIB-AXYS’ Africa research analyst, foreign investors are not moving back home but playing in frontier markets. “There are better returns from markets such as Nigeria, Zimbabwe, and Mauritius,” he said.

The withdrawal of foreign investors continues to leave behind sharply undervalued share prices with the main NSE market, for instance, trading at a price-to-earnings ratio of 9.35 times in 2022 from a higher ratio of 22.49 times
in 2021.

The bourse has seen a shift to reliance on domestic investors ever since the disruption caused by the recent hikes in global inflation, which saw many countries adjust their interest rates to stay afloat. The country also faced number of climate disasters as well as the effects of the Russia-Ukraine conflict. Furthermore, the Kenyan shilling has been highly affected as it continues to lose value against the dollar to stand at Sh135.90. With the dollar shortage continuing to be an issue, more foreign investors are expected to continue deserting the Kenyan market.

This, in addition to other economic challenges, has affected some companies’ strategies and growth prospects, thus affecting their share prices. As things continue to normalize, the bourse must find ways to attract back foreign investors as they are crucial to its come-back.  (


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