- The Nairobi Securities Exchange and the Dar es Salaam Stock Exchange are witnessing erosion in share prices due to massive selloffs by international investors who are liquidating their investments in emerging and frontier markets.
The performance of East African stock markets has been heavily influenced by foreign investors who dictate daily trading activities. The rising interest rates in the US and Europe, and the geopolitical tensions released by the Russian invasion of Ukraine are impacting the investment decisions of foreign investors in emerging markets. The Nairobi Securities Exchange and the Dar es Salaam Stock Exchange are witnessing erosion in share prices due to massive selloffs by international investors who are liquidating their investments in emerging and frontier markets.
Foreign Investors find Emerging and frontier markets risky because of depreciating currencies, high inflation, increasing political instability and rising debt levels. According to economic experts, as the Fed tightens policy, bondholders are demanding higher returns for investing in emerging markets. Defaulting of Zambia and Sri Lanka on their repayment obligations has made the foreign investors extra cautious. Economists warn that high-interest burdens may rule out public investment by governments, such as the standard gauge railway and Julius Nyerere hydropower dam, the key projects in the Tanzanian budget.
Almost 58 percent of the NSE is currently controlled by foreign investors who have been net sellers from 2017 to 2021. Foreign sales shot up in the first six months of this year, pushing trading to an all-time low valuation of 10 times the price-to-earnings ratio according to NSE data. In June this year the index plunged below 1,700 for the first time in 20 years.
Also read;
https://trendsnafrica.com/german-assistance-for-drought-relief-for-east-africa/
