East African bourses are still dominated by foreign investors and a few big firms. PHOTO | FILE | NATION MEDIA GROUP Securities across the East Africa region start another year with little cheer in terms of attracting new listings, increased participation from local retail investors and trading dominated by a few large firms.
In a trend projected to continue in 2020, stockmarkets in Kenya, Tanzania, Uganda and Rwanda have become captive to foreign investors and government bonds while experiencing prolonged drought of attracting new corporate listings.
In Kenya, foreign investors account for about 70 per cent of trading with retail investors contributing a mere two per cent.
Worse, a handful of stocks of large companies dominate trading, a scenario that has been eroding the true market value of many small companies and discouraging many others from listings for fear of joining a long list of laggards.
In Kenya, Safaricom, Equity Bank, KCB, East Africa Breweries, BAT Kenya, Co-operative Bank and DTB Bank dominated trading last year, accounting for 89.5 per cent of turnover, according to data compiled by Standard Investment Bank (SIB).
For companies cross-listed, the pursuit of more liquidity and a greater ability to raise capital has proved elusive with stocks of many failing to generate interests from investors and trading below the issuance price.
This trend was at play when the Nairobi Securities Exchange (NSE) opened the first day of business last week on a subdued note, with foreign investors dominating trading, albeit as net sellers.
SIB data show market activity was subdued with a turnover of $800,000 with benchmark indicators posting mixed results.
The NSE 20-share index climbed 0.7 per cent to close the day at 2673.9 points, while the all share index retreated by 0.3 per cent. The NSE 25-share index closed the day unchanged at 4100.57, while market capitalization stood at $25 billion.
Jubilee Insurance was the surprise top mover, accounting for 29.3 per cent of total turnover followed by regional lenders Equity Bank and KCB that gained 1.4 per cent and 0.5 per cent respectively.
On the first day, foreign buys accounted for 41.7 per cent of market activities, with foreign sales accounting for 46.7 per cent.“Foreign investors commenced the year as net sellers, recording paltry net outflows of $38,200,” said SIB’s Kenya Daily Report.In Tanzania, Dar es Salaam Stock Exchange (DSE) recorded a total turnover of a paltry $8,394 from 25,857 shares traded in 23 deals with local investors being the sole […]
