Blue chips hardest hit by foreign exits

Share prices of blue chip firms on the Nairobi bourse were the biggest losers in five days with foreigners as net sellers in what could signal flight to safety as the number of Covid-19 cases rises.

The plunge to below 2,000 points for the Nairobi Securities Exchange (NSE) 20 Share Index on Monday came as foreign investors accounted for nearly 90 percent of the total trade for the day.

On the same day, the number of Covid-19 cases rose to 16, having more than doubled the previous day to 15 from seven in the course of the week.

Data compiled by Standard Investment Bank (SIB) showed that in terms of buying, foreigners held just more than 55 percent of the market total trading for the day, showing the net position was foreigners selling.

The blue chips lost between eight and 13.7 percent of value in the five days, ending Monday. Of the top 10 losers during the five days, seven were blue chips, including Absa Bank #ticker:ABSA, Equity #ticker:EQTY, EABL #ticker:EABL and DTB #ticker:DTK. The three non-blue chips firms in the list were Sameer #ticker:FIRE, Kapchorua #ticker:KAPC and Williamson Tea #ticker:WTK.

The loss by blue chips pushed the indices to the lowest levels in more than a decade, analysts noted, adding this had come as the share prices fell for the eighth consecutive session.

“All the benchmark indices closed in the red with the NASI, NSE 20 and NSE 25 declining 3.6, 3.3 and 4.1 per cent, respectively. The NSE 20 retreated for the eighth consecutive session to close below the 2,000 mark, the lowest in over a decade,” said SIB.

The fall in prices also served to raise the dividend yields of several blue chips, including Absa that stood at 10.78 percent, Nation Media Group #ticker:NMG, Bamburi Cement #ticker:BAMB, Standard Chartered #ticker:SCBK and Safaricom #ticker:SCOM.

The net foreign outflows stood at Sh149 million with Safaricom leading the charge with total net outflows of Sh128 million. “Foreign investors started the week as net sellers, recording net outflows of $1.4 million. Safaricom led the selling charge with net outflows of $1.2 million,” said SIB.

With the blue chips falling, Genghis Capital recommended that investors take positions in KCB #ticker:KCB and Equity as a way to lower the cost base of their portfolios.