NSE Performance Drops Significantly as Foreigners Withdraw From the Market

The Nairobi Securities Exchange (NSE) noted that its performance dropped in 2022, as foreign investors who dominate the activity on the platform are withdrawing.

Capital inflows will be affected by the participation of foreign investors, which has hit a record low of 47 percent according to a report by Capital Markets Authority.

“The market has historically recorded foreign investor participation in the range of 60 percent to 70 percent between 2019 and the first half of 2021. However, with increased global economic shocks, the market has suffered a loss in its foreign investor participation levels in recent months,” read the report.

Only 61,000 of the 2.03 million share accounts have participated in trading for the past two years according to the Central Depository and Settlement Corporation (CDSC).

The Capital Market Authority insists that Kenyans should be encouraged to engage in the Nairobi Securities Exchange with the fallout of foreign investors using the platform.

Nairobi Security Exchange (NSE) also noted the bear run of the markets that have lasted for six years. They hope that with the introduction of new products, new investors will engage more.

The Chief Executive officer of the NSE, Geoffrey Odundo, also noted that the Kenyan market was the worse change in Africa.

“This market is very much undervalued. We are seeing price-to-earnings multiples of 12 times. That shows you there is a great opportunity in the market. Some of these discounts are unbelievable when you see banks trading at one point at multiples of up to five times,” Odundo remarked

In 2015, the NSE 20 share index stood at 5000 points and now the index stands at 1900 points. The NSE CEO hopes local investors will take this opportunity to invest while they are low.

He stated that the dips and ups will always present themselves and it is up to them to take advantage of that without waiting.