Data compiled by African Alliance shows the year-to-date dollar return on the NSE FTSE 15 index stood at -12.5 percent at the end of last week compared to -2.6 percent at the beginning of September.
The index tracks the performance of the 15 largest firms at the NSE by market capitalisation and is mainly used by foreign investors when picking portfolios which are almost exclusively invested in large cap stocks.
The dollar returns at the Nairobi Securities Exchange (NSE) have fallen by 10 percentage points since the beginning of September, reflecting the slide in share valuations combined with a weaker shilling.
“The FTSE NSE Kenya 15 is down 12.9 percent year-to-date (-12.4 per cent in dollar returns) the average weekly value traded in the last six months is Sh2.7 billion ($26.3 million),” said African Alliance in their weekly continental market report.
Since the beginning of September, the shilling has depreciated by two per cent against the dollar, going from 100.60 units to 102.65 units to the greenback.
The negative dollar returns mean that foreigners exiting the market are realising less value for their portfolio.
Upon conversion of sales proceeds to hard currency when exiting a stock, foreign investors can either make a currency gain or loss depending on the direction of the shilling in the duration they held the stock.
In the first eight months of the year, when the NSE FTSE 15 index largely had a positive dollar return, foreign investors were cashing in on their investments, with huge net sales recorded at the bourse.
The fall in prices is, however, likely to entice some of them to the buyers table, taking advantage of low valuations to get back into the market.