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On dollar returns, Nairobi Securities Exchange lagged behind African rivals in the first half of 2023.

In comparison to other markets, the Kenyan stock market’s first half-year dollar-denominated returns to investors were the worst.

According to data from the Morgan Stanley Capital International Index (MSCI), the market had paper losses of 30.9 percent during the course of the six months ending in June, as opposed to losses of 24.3 percent in Nigeria and a contraction of 20.7 percent in Zimbabwe.

To the contrary of the general trend, the equity markets in Tunisia, Morocco, and Senegal had dollar gains of 4.9, 14.8 and 3.6 percent, respectively.

The Capital Markets Authority (CMA) has blamed the declining profits on the exodus of international investors who viewed some African markets as more risky.

Given the debt crisis problems a lot of African economies are experiencing, foreign investors adopted a cautious stance, which lowered interest in the stock market. Nevertheless, the CMA stated that there were some appealing counters that were supported by excellent performance, particularly in the banking, commodities, and industrial sectors.

The majority of sales were made in March over the six-month period, posting a net selling position of Sh15.33 billion for the offshore investors.

However, foreign investors’ portfolio flows startled observers in June when they invested Sh242.2 million in shares to end a 15-month selloff streak.

The market has seen net foreign investor purchases over the last three weeks, continuing the positive surprise into July.

Even if the outflows are anticipated to slow down, analysts have remained realistic about the direction of flows, anticipating that foreigners would continue to be primarily net sellers in the second half of the year.

In advanced nations, tighter monetary policy is projected to deter foreign investors as they look for more lucrative returns in their home markets.

Advanced economies’ central banks are continuing to tighten monetary policy. The US Federal Reserve, for example, raised its funds rate by an additional 0.25 percent on Wednesday.

In an effort to further stabilize inflation expectations, the European Central Bank increased its benchmark lending rate by a similar amount on Thursday.

Inflows from overseas investors are expected to resume, according to the CMA, on the assumption that the top central banks will hold off on tightening monetary policy until the beginning of 2024.

The CMA further claims that in order to address the MSCI’s impression of obstacles to foreign investors operating in Kenya, it has held engagements with the MSCI.

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