The Kenyan Stock Market Closes The Week Tumbling Down As Foreign Investors Drive Sell-Off

The equities market closed on a bearish note for the second consecutive session, with major indices posting declines. The Nairobi All Share Index (NASI) edged down by 0.2%, while the NSE 10, NSE 20, and NSE 25 declined by 1.9%, 0.9%, and 1.7%, respectively. These movements reflect a cautious market sentiment as investors weighed earnings releases and broader economic conditions.

Equity turnover saw a remarkable 180.3% increase to USD 1.9 million. Foreign investors dominated trading, accounting for 70.6% of the total turnover, up from 63.1% in the previous session. This indicates heightened participation by offshore players, who continue to drive market liquidity despite prevailing volatility.

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Figure One; Shows the declines across the NASI, NSE 10, NSE 20, and NSE 25 indices. (Source; SokoDirectory Investments Research Department.)

Safaricom remained the most actively traded counter, contributing 73.4% of the day’s turnover. However, the stock faced significant selling pressure, declining by 2.8% to close at KES 17.20. This marks the second consecutive session where the telco has led the market’s downward movement, reflecting investor concerns over its valuation and macroeconomic pressures.

Banking stocks experienced mixed fortunes, with KCB Group shedding 2.3% to settle at KES 42.75, while HF Group dropped 1.8% to KES 6.70. The sell-off in financials suggests investor caution amid expectations of regulatory changes and evolving monetary policy landscapes.

On a positive note, the power sector emerged as the bright spot of the day. Kenya Power and KenGen gained 11.5% and 2.7%, closing at KES 7.56 and KES 4.21, respectively. Kenya Power was the session’s top performer following the release of its half-year results, which revealed a threefold increase in EPS to KES 5.11. The board declared an interim dividend of KES 0.20 per share, with book closure set for 28th February 2025.

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Figure Two; Highlights the sharp rise in turnover and the significant foreign investor participation. (Source; SokoDirectory Investments Research Department)

Insurance stocks posted mixed performances. Jubilee Insurance inched up 0.3% to KES 200.00, largely driven by foreign investor purchases. Meanwhile, Britam suffered a sharp 9.9% decline, closing at KES 7.26 to become the day’s biggest loser. The sharp drop underscores lingering investor apprehension about the company’s earnings outlook.

Foreign investor flows remained negative for the fifth consecutive session, with net outflows totaling USD 312.3K. Safaricom led the sell-off, while Kenya Power saw the most foreign buying interest, reflecting a shift in portfolio positioning towards defensive stocks amid ongoing market volatility.

In corporate news, East African Breweries PLC (EABL) reported a strong 19.6% year-on-year growth in profit after tax for the half-year ended 31st December 2024. This growth was primarily driven by foreign exchange gains amounting to KES 1.18 billion, a significant turnaround from the prior year’s forex loss of KES 2.3 billion. The positive currency impact helped offset an 11.9% decline in operating profit.

EABL’s net sales rose by 2.1% year-on-year to KES 67.92 billion, up from KES 66.54 billion. Excluding currency fluctuations, organic sales growth stood at approximately 8.0%, with volume growth recorded at 1.0%. The cost environment slightly improved, with total costs declining by 1.2% to KES 55.77 billion. Notably, indirect costs dropped 17.6% to KES 15.99 billion, primarily due to favorable forex translations, while direct costs rose 7.4% to KES 39.78 billion.

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Figure Three; Depicts gains in Kenya Power and KenGen, while Safaricom and Britam experienced notable declines. (Source; SokoDirectory Investments Research Department)

EABL’s pre-tax profits surged 20.3% year-on-year to KES 12.15 billion. After a tax charge of KES 4.04 billion, net profit stood at KES 8.11 billion, reflecting a robust 19.6% increase. The group’s comprehensive income totaled KES 9.38 billion, up 12.6%, bolstered by a KES 1.27 billion gain from the translation of foreign operations.

The board has recommended an interim dividend of KES 2.50 per share, subject to withholding tax, payable on or about 30th April 2025. The book closure date for dividend eligibility has been set for 21st February 2025. Investors are keenly watching EABL’s next moves, especially as the firm navigates currency fluctuations and rising input costs.

Overall, the day’s market performance reflected mixed sentiments, with heavy selling pressure on large-cap stocks such as Safaricom and KCB, while select counters in the power sector saw substantial gains. The increased foreign participation in both buying and selling activities signals the importance of external investors in shaping market trends.

Looking ahead, market watchers expect further volatility as more corporate earnings reports are released. Investors remain cautious, weighing macroeconomic developments, monetary policy signals, and the global investment climate. Key indices are likely to continue fluctuating based on corporate performance and economic data releases in the coming weeks.

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