Kenya stock exchange plans mobile trading app by end of first quarter

By David Whitehouse

Posted on Thursday, 17 November 2022 11:28
Odundo NSE CEO speaks during Reuters interview in Nairobi
Geoffrey Odundo, chief executive of Nairobi Securities Exchange. REUTERS/Thomas Mukoya

The Nairobi Securities Exchange plans to launch a mobile trading app for retail users by the end of the first quarter, CEO Geoffrey Odundo tells The Africa Report.

The multi-asset class trading platform will come with a corporate news feed and real time pricing and data, Odundo says.

The exchange is working with an unnamed technological partner to develop the app, which will be available nationwide. There won’t be any need for users to have a bank account, and a mobile money account will suffice.

Everything that trades on the exchange will be available on the app, Odundo says. The aim is to start with a simple version and then upgrade it to include facilities such as day trading and the ability to lend stock.

The exchange is seeking ways to revive activity after a slump in earnings. Net income in the first half of the year dropped by 48% to 40.2m shillings. The bourse said at the end of August it was “hopeful that trading will regularize in the second half of the year after the election process, which affected investor sentiments and trading activity, is completed.”

That rebound has yet to materialise.

  • The exchange is still in a “low trading cycle,” with international investors being held back by increased global risks, the war in Ukraine and higher interest rates in the US and Europe, Odundo says.
  • Foreign investors accounted for 61.5% of activity on the exchange in the three months to end June.
  • Odundo is “optimistic” that international investors will return to the exchange in 2023.
  • Kenya’s economic fundamentals are strong and the country’s membership of the MSCI Frontier Markets Index will help drive inflows once global risk appetite improves, he says.

Commodities, carbon credits

The exchange needs to reduce concentration after a new listings drought. The five largest companies, Safaricom, East Africa Breweries, KCB, Equity Bank and Co-op Bank account for 77% of market capitalisation. There has not been an IPO since October 2015, when the Stanlib Fahari REIT was listed, and the last privatization was Safaricom in 2008.

Kenya’s new president William Ruto said in October that the government plans to privatise between five and ten state owned enterprises (SOEs) over the next 12 months. The country’s privatisation commission is currently working on the process and no names of SOE candidates or timeframes have yet been given, Odundo says. No IPO advisers have yet been appointed as far as he knows. “The entire process rests with the privatisation commission.”

The exchange currently offers 10 equity derivatives, an index derivative, a gold exchange-traded fund and three REITs. A private market platform was introduced next year.

  • Odundo wants to diversify the exchange’s products to include trading in digital assets.
  • He is also working with the government to introduce commodities and carbon credits trading, which will come to fruition in the next two years.
  • He declined to say which commodities will be available but said that commodity derivatives will be “part of parcel” of the offer.

The Bottom Line

A recovery in global risk appetite will need to be accompanied by high-quality new listings to increase interest in the narrow Kenyan market.

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