Question

2. Explain how foreign portfolio flows affect stock market performance in Kenya (Use a case study of Nairobi securities exchange)

Answer 1

Foreign portfolio flows will be affecting the stock market performance in the Kenya as-

A. Foreign portfolio flows means it will increase the performance of the domestic stock market because foreign investors are buying into the stock markets of kenya, and it would lead to increase in the market capitalisation of many companies.

B. It will mean that foreign flows will be leading to increase in the market sentiments of various investors because they will believe that foreign institutional investors are buying into the stock market of domestic industry so they will be bullish on the domestic industry.

C. It will be a positive sign for the overall Nairobi stock exchange because it will be showing upward traction and change of momentum in the the short run and the long run.

D. This will be leading to domestic investment also going up because domestic investors will believe that prospect of Companies listed in Nairobi stock exchange are getting better because of the investments of the foreign nationals and they will be trying to invest more into the economy.

E. It will also mean that there would be new investors who will be attracted to the Companies listed on the Naroubi stock exchanges and this will be leading to to increase in the performance of the Companies listed on the stock exchanges due to increase in the money flow.