With four counters suspended and more companies leaving the Nairobi Securities Exchange(NSE) than those joining, poor off-take of new products and a market so concentrated that one company matches the value of all the other 60 companies, Kenya’s capital market is in a sorry state.
The bond market has been ripped by scandals after investors lost their money in collapsed issuers and is now mostly trading government treasuries, having shrunk from 28 listings valued Sh71.28 billion in August 2014 to a Sh22.1 billion portfolio issued by six firms.
Then in early 2020 the coronavirus pandemic hit stock prices, which fell with foreign investors exiting, sending the bourse to a multi-year low.
Perhaps as a testament to its resolve amid the crisis, the Capital Markets Authority (CMA) has returned to the drawing board and now wants to review its 10-year master plan and hopefully reinvigorate the market.
The regulator’s chief executive Wycliffe Shamia — who took office just as Covid-19 hit — says it [master plan] has only attained 54 per cent of its targets and has now hired a consultant to ensure that the roadmap delivers its aspirations.
The plan has received the backing of the National Treasury.
Mr Shamia who replaced Paul Muthaura served in acting capacity for a year after delays in completing the recruitment and was only confirmed last November.
The biggest challenge CMA faces is the low uptake of products, a listing drought and low performance by companies at the NSE that has left it reliant on only five top firms.
Since the NSE itself listed through an IPO seven years ago, the bourse has only welcomed listings by introduction of a few small firms which have performed poorly under the Growth and Enterprise Market Segment (Gems) and Bank of Kigali’s cross listing.
During that period, it has suspended Deacons, Kenya Airways, ARM Cement, National Bank and briefly Nairobi Business Venture; and lost Kenol Kobil, Marshals East Africa, Atlas, African Lakes Corporation (Africa Online) and Unilever, all of which have shaken investor confidence.
It has not helped that a real estate investment trust, Asset Backed Securities and an exchange-traded fund have reported dismal uptake.“You see, for many years there has been a feeling in the market that we are operating on different pitches, one is very green and the other very dry. It is as if the CMA is running too fast leaving the market behind,” says the chief executive.But market analysts believe the greatest […]