Foreign exits from Safaricom drag down the market

Monday November 13 2017

A staff member at the NSE monitors online trading. file photo | nmg

A staff member at the NSE monitors online trading. file photo | nmg 

By KEVIN MWANZA
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The Nairobi Securities Exchange (NSE) full-week performance was dragged lower by foreign investors exiting Safaricom and banking shares. The main NSE-20 share Index fell 1.3 per cent to close the week at 3,752.15 points.

Data showed foreign investors were net sellers for the second week running as their participation at the bourse dropped to 56.6 per cent from 61.5 per cent the previous week.

Safaricom was the main casualty of the foreign exits, which sliced its share price by 3.9 per cent to hit a three-week low of Sh24.50 a share. The counter was, however, still 27.9 percent higher this year, double the average NSE performance.

Dealers said a call by the main opposition party Nasa to its supporters on November 3 to boycott Safaricom services had not influenced the downturn in the share price.

“There is no fundamental change to the company or the industry or economy as a whole that you can pin on the drop,” Ronald Lugalia, head of trading at Kingdom Securities, said.

Safaricom’s share price was unchanged on Monday.

There was also a fall in Kenya Commercial Bank (KCB), Co-operative Bank and Equity Bank after they posted less than impressive nine months earnings. They shed 2.4 per cent, 2.7 per cent and 0.6 per cent during the week.

The lenders posted lower or marginal growth in profits as they grappled with the effect of an interest rate cap law that has squeezed margins on fixing rates at four percentage points above the 10 per cent central bank rate.