NAIROBI, Feb 16 (Reuters) – The Nairobi Securities Exchange expects new listings to pick up this year, with four new companies expected to list, plus a cross-listing from another market, its chief executive officer said on Tuesday.
The exchange serves as an entry point for foreign investors looking for exposure to East Africa’s fast-growing economies, and is among the continent’s fifth biggest by market capitalisation alongside South Africa, Egypt, Nigeria and Morocco’s bourses.
The exchange is also among the top three constituents of the MSCI’s Frontier Markets Index.
Chief Executive Officer Geoffrey Odundo said the exchange expects to list two companies from Ibuka, its incubator platform that prepares young firms for listing.
“We will possibly have two main listings and two Ibuka companies converting,” he told Reuters in an interview.
He said the companies are in manufacturing and financial services.
Odundo said the Nairobi bourse also expects to cross-list one more firm this year.
The exchange currently has 66 listed companies, two of which are cross-listed from Rwanda and Uganda. Its market capitalisation was 2.53 trillion shillings ($23.14 billion) as of Tuesday.
The last company to list shares on the exchange was Rwanda’s Bank of Kigali in 2018.
The exchange’s main NSE-20 Share Index ended 2020 down 30% at 1,868.39 points after hitting an all-time low in August of 1723.96 points, hurt by effects of the COVID-19 pandemic, the trade war between the United States and China and uncertainty over the U.S presidential elections.
Odundo said he expected the index, which closed at 1,879.19 on Tuesday, to hit at least 2,600 by the end of the year.“The global risk has come down, so we see a bit more activity coming into the market,” he said.Odundo said the bourse will launch an over-the-counter platform in the next two weeks to allow unlisted companies to trade their shares as well as instruments such as real estate income trusts.In 2019, Nairobi became the second bourse in sub-Saharan Africa after Johannesburg to start a derivatives market.The market transacted 45 million shillings worth of derivative contracts in 2020, a figure Odundo said is expected to more than double this year. (Reporting by George Obulutsa. Editing by Jane Merriman)