Foreign investors pumped in a net of Sh301 million into the Nairobi Securities Exchange (NSE) last week, eyeing stakes in banking stocks ahead of full-year results announcements that are expected to reveal higher profits.
The net inflows helped claw back some of the foreign investor capital that has bled out of the bourse in recent weeks on the continued flight to the US, which has raised interest rates on its bonds to counter high inflation.
NSE shows that KCB attracted the bulk of last week’s foreign investor purchases into the banking segment with a net inflow position of Sh157 million. “We believe the increased net buying position was driven by investors taking up positions in banking sector counters, in anticipation of the positive full year 2022 results,” said analysts at AIB AXYS Africa in a market report covering last week’s trading.
KCB was second only to Safaricom in the market last week in terms of net inflows after the telco saw net buys of Sh212.4 million on continued appetite from investors keen to enter the stock at a relatively lower price.
In Monday’s trading, KCB eclipsed Safaricom in terms of traded turnover, moving shares worth Sh9.44 million versus the telco’s Sh9.26 million. Co-operative Bank, meanwhile, matched Safaricom’s turnover with trades worth Sh9.26 million as well. This year, foreign investors have been predominantly on the selling side, recording net outflows of Sh3.2 billion since the beginning of January, pulling down share prices among the large-cap counters.
The banking sector has, however, periodically bucked the trend, owing to the growth in profits recorded by the lenders that have resulted in more stable dividend payouts than other segments.
Most lenders are expected to report record net profits for the year ending December 2022, which would ideally result in either higher dividends or at least a maintenance of last year’s payout volumes.
Preliminary industry results published by the Central Bank of Kenya show they made a record pre-tax profit of Sh223.7 billion in the 11 months to November. Various analysis reports by investment banks have tipped banks to be the top-performing counters at the NSE this year, based on their earnings growth and anticipated higher dividend payouts.
Given the dearth of profit growth in other sectors, large, stable lenders are expected to attract a significant share of any capital coming into the bourse this year.