Financial Markets Continue to Gain Traction in East African Giant – Kenya

Kenya's main stock exchange's IPO reaps success for East Africa’s largest economy as it eyes regional influence. The country continues

Kenya’s campaign to spearhead its status as a regional financial centre was strengthened as the country saw emphatic activity on the local bourse. The much awaited IPO of the Nairobi Securities Exchange (NSE) surged 83% as participants welcomed trading in the stock. The exchange has also reduced the cost of holding a seat on the exchange in a bid to enhance activity. The move fits into Kenya’s long-term vision of Nairobi playing a stronger role in regional economics.

The NSE’s much awaited IPO was welcomed by investors in the East African nation, the NSE becoming the second trading venue in Africa to be listed on an exchange. NSE shares were traded on the bourse on the 9th of September, of the 66 million issued, 3.8 million shares exchanged hands on the day. A spree of volatility hit the markets with prices skyrocketing throughout the day.

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According to the exchange, the shares closed 83% higher than the issuance price, the share price had doubled during the day. Exchange data revealed that the NSE shares were posted at $0.10 and were 6.6 times oversubscribed.

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The exchange also reported details of changes in the way new members can join the bourse. In an attempt to bolster the number of providers the exchange is planning to reduce the cost of holding a seat on the exchange, brokers and banks have paid as much as $2.8 million, however new measures aim to decrease the cost by a tenth to $280,000.

Kenya has been one of the fastest developing nations in the African continent, analysts’ estimates for 2014 show that the country will cross a 5% GDP growth as a number of key sectors such as tourism, telecommunication and construction develop.

Kenya has been introducing a number of reforms and policies to compete in the modern trading environment. In December 2013, the government introduced new rules that have fostered the seeds for new financial products including derivatives. The country’s financial watchdog, the Capital Markets Authority (CMA), plans to roll out new derivatives in interest rate futures, currencies and commodities.

Kenya’s financial trading venue, the NSE, introduced online trading in 2010, the market continues to evolve as broker-dealers support participation of retail investors.

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