Uganda’s Parliamentary Pensions Scheme (PPS) is contemplating a reduction in its investments in Kenya, citing macroeconomic challenges prevalent in the Kenyan market. With total equity assets amounting to UShs. 24 billion, only two percent of these investments are allocated to Kenya.

In its latest financial report, the scheme disclosed a gross investment income of UShs. 55 billion and total assets valued at UShs. 425 billion. Notably, there has been a significant growth in total assets, rising from UShs. 349 billion in 2021/2022 to UShs. 425 billion in 2022/2023.

During the scheme’s Annual General Meeting held on February 23rd, Esther Namirembe, a representative from GenAfrica Assets Managers, proposed a strategic shift in investment allocation. Namirembe suggested a reduction in the allocation to stocks listed on the Nairobi Securities Exchange (NSE) and a selective reallocation to stocks on the Uganda Securities Exchange. The focus would be on companies offering attractive dividend yields and valuations.

According to asset managers, the macroeconomic challenges faced by Kenya have weighed down the stock market outlook, despite positive earnings, attractive dividends, and valuations.

To address these challenges, the scheme is considering alternative strategies, including reallocating investments to short to mid-term government securities, spanning two to three years. This move aims to enhance mid-term liquidity access and prepare for significant liquidity events, such as the 2026 elections.

The potential reduction of equity investments in Kenya by Uganda’s Parliamentary Pensions Scheme reflects a broader trend of foreign investor flight from Kenya’s equity markets. While the scheme’s investments in Kenya constitute a small portion of its overall portfolio, this proposed exit aligns with the recent outflows observed among foreign investors in the Nairobi bourse.

Conversely, there has been a notable increase in investor interest in Kenya’s bond market, with the Nairobi Securities Exchange reporting record-breaking turnover exceeding KShs. 170 billion within a single week in late February.

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