Investors in NSE-listed companies have lost Sh191 billion in two weeks in response to the aggressive price rally that took place in the first three months of this year.
NSE’s market capitalisation which indicates investors’ wealth dropped the highest peak of Sh2.896 trillion to Sh2.706 trillion by the close of trading last Thursday.
The price rally was as a result of increased sell-off by foreign investors who were taking profits on counters that have recorded major gains recently.
Analysts noted massive exits from counters such as Safaricom which accounts for nearly half of the market capitalisation and Equity Bank.
“Foreigners were […] exuding net selling interest in Safaricom. Foreign investors were net sellers for the fourth consecutive session in a row,” Genghis Capital noted its analysis adding that foreigners dominated to attain 71 percent of the trade last Thursday meaning that prices dropped the massive exits of foreign investors form some counters.
“Foreign investors persisted in their dominance in the session though at a lower rate, 71 percent of total market participation. The foreign desk was mainly active in the top five movers for the day,” Genghis said.
On Thursday, foreign investors’ total outflows were more than inflows by Sh140 million which was lower than Wednesday’s Sh160 million.
“Foreign investors turned net sellers for the fourth consecutive session, recording outflows of Sh140 million, a drop of 15.2 percent from Wednesday’s session,” Standard Investment Bank (SIB) asserted.
Despite the loss, analysts say that investors are in for the long-term expecting improved corporate performance this year.
“Most people are not in the market for the short-term and own the shares for the long-term. Even with the correction, they will still continue investing,” Eric Musau head of research at Standard Investment Bank stated.
Additionally, investors’ wealth has increased despite the loss because NSE opened the year with a market cap of Sh2.5 trillion which has slightly risen to over Sh2.7 trillion.