Foreign investment in Kenyan stocks dropped to a six-year record low on Wednesday, April 26.
Data from Nairobi Securities Exchange indicated that the country recorded a six-year low due to foreign investors' decisions.
NSE recorded a low of 30.1 per cent in foreign investment, with the nosedive being attributed to the country's debt crisis.
The current political uncertainty contributed to the nosedive in foreign investments in the security markets. Additionally, the dollar to Kenyan shilling's exchange rate contributed to the drop despite recovery reports.
According to Capital Markets Authority (CMA), local investors sustained the stock market from shock.
Following the record drop, CMA noted that it would affect the general market and thus affect local companies in the country.
"Unlike the local retail investors, most foreigners keep restructuring their portfolios. The reduced holdings by foreign investors is, therefore, negative for the NSE as it is a significant driver for stock price falls, which contributes to high volatility in the market," the Capital Markets observed.
A similar trajectory was recorded in dollar bonds, where it was recorded that foreign investors preferred safer ones offered by Western countries.
The shift pointed to a stressed market for local companies and traders.
Between January and September 2022, the country experienced the same drop where investors lost billions as shares plunged.
The plunge was attributed to a hike in interest rates in developed markets like the US. The government's strategy to raise interest rates resulted in inflation.
However, President William Ruto revealed plans to revive the economy and attract investors. Ruto applauded his economic advisor David Ndii who he insisted helped to pull the country out of a crisis.
The Head of State indicated they had helped revive the Kenyan shilling, slumping against the dollar. Ndii was also instrumental in striking a fuel deal with Saudi Arabia.
“I want to thank the young men who have done something phenomenal. They have managed to put together a program that has taken us away from looking for Ksh68 billion every month to buy fuel,” he explained why the praise," Ruto stated.
“In the next month or so, I foresee the dollar stabilising to an exchange rate of Ksh115,” he exuded optimism.
