Kenya: We're best suited to host East African Central Bank

Nairobi has already been a financial hub for eastern and central Africa long ago. Nairobi Stock Exchange is way far ahead of DSE. There are so many regional offices for international organizations and even the global multinational companies.
Do we have any regional offices for these international organizations in Dar? I think it's a valid argument to host the EAC central bank where the financial hub has the presence already.
 
SHERRIF ARPAIO said:
Nairobi has already been a financial hub for eastern and central Africa long ago. Nairobi Stock Exchange is way far ahead of DSE. There are so many regional offices for international organizations and even the global multinational companies.
Do we have any regional offices for these international organizations in Dar? I think it's a valid argument to host the EAC central bank where the financial hub has the presence already.
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the worst performing stock market in Africa, the likes of Nyaga stock brookers (thieves) were groomed here! go and sleep if that is your strongest argument esp. when men are talking and don't bring your boasting here! NSE is a stealing machine the likes of Kibaki, Kirubi et al have been using that institution to cover up their theft! BTW what makes you think having international organizations qualify you better than the rest today"s world is a high tech one, logistics are there to make the office be anywhere!

Analysts rank Kenya's stock market poorly

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FREDERICK ONYANGO| NATION Analysts say that the Kenyan stock market is the worst performing in Africa with matters made worse by the weakening shilling.

By JEVANS NYABIAGE, jnyabiage@ke.nationmedia.com
Posted Tuesday, June 28 2011 at 19:32

Kenya is the worst performing stock market in Africa, according to analysts.

The latest update from the African Alliance Kenya Securities says that year-to-date the local stock market performance went down by 21.9 per cent in US dollar terms compared to North African countries, which faced uprisings earlier in the year.

Their report comes as the cost of living continues to increase under a fast depreciating shilling.

"We believe equities in Kenya will continue to under-perform generally for the rest of the year especially for foreign investors who will take a hit on the exchange rate," said Mr Eric Musau, an analyst at African Alliance Kenya Securities. "We do not expect the currency to strengthen in the short-term."

As at Friday, June 24, 2011, on week-on-week, turnover declined to Sh1.15 billion from Sh1.94 billion. NSE 20 Share Index was down by 0.40 per cent during the week to stand at 3969.03 points.

Mr Musau said that while the Kenya shilling has retraced some of the losses it experienced, it is still the worst performing currency in Africa year-to-date. It is 12.1 per cent weaker against the US dollar, 14.0 per cent lower to the Japanese yen, 21.4 per cent off to the euro and 9.7 per cent against the South African rand.

With the rising inflation and unstable Kenya shilling, analysts say essential imports will become more expensive. At an average inflation of 12.95 per cent last month, up from 12.05 in April, low income earners are hit the most.

During the month, said the African Alliance analysts, low income earners experienced an inflation rate of 13.97 per cent, the middle income bracket had 8.74 per cent while high income earners had an inflation of 6.18 per cent. Other provinces, except Nairobi, had an inflation rate of 13.31 per cent.

"Inflation appears skewed towards the most vulnerable in society. The discretionary spending of the high income earners remained relatively insulated while low income earners have been most affected," said Mr Musau.

He warned that the Central Bank of Kenya's monetary tightening in a bid to tame rising inflation and the weakening currency may slow economic growth, which could affect the banking sector through lower borrowing.

"If this slows substantially, we could see interest income as well as non-funded income affected leaving little room for banks apart from cutting costs. The banks are already resetting their lending rates upwards in anticipation," he said.

Commercial Bank of Africa (CBA) and I&M Bank will be adjusting their base lending rates next month.

CBA said recently that it would be raising the rate of its loans denominated in Kenya shillings from 13 per cent to 14.5 per cent from July 11 while I&M Bank would push up its lending rates from 13.5 per cent to 15 per cent effective July 1.

"Volatility in the currency will also see very strong growth in foreign currency income," said Mr Musau.

"We see inflation worsening before getting better, easing towards the end of the year when harvests start."

Ms Razia Khan, Standard Chartered Bank's head of Africa research, said in a briefing last week that inflation may rise to slightly above 20 per cent later this year if the shilling continued to depreciate and food and fuel prices remained high.

She said food and fuel price increases were largely to blame with the weakness of foreign exchange making matters worse.
Tuesday morning, commercial banks quoted the shilling at 90.00/30 against the dollar, stronger than Monday's close of 90.70/91.00.
On the good side, however, Mr Musau said exports with substantial domestic content were likely to be more competitive in the global market with non-essential imports expected to reduce and foreign direct investment may start to pick up.

http://www.nation.co.ke/business/ne...904/-/view/printVersion/-/8rckw3/-/index.html


Investors paid Sh281m for losses at Nyaga Stockbrokers

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Investors who had lost their money outside the Nyaga Stockbrokers offices in Nairobi in 2006. Those who filed genuine claims will be paid Sh281 million. File

Stock market investors - who lost their money with the collapse of Nyaga Stockbrokers - have been compensated to the tune of Sh281 million following a ground-breaking payment in the 56-year history of the Nairobi Stock Exchange.

Disclosure of the payments has been made in the Capital Markets Authority's (CMA) financial report for the year ended June 30, 2010.
"To ensure investors who lost their funds through Nyaga Stockbrokers Limited did not suffer any longer, the CMA worked with the appointed statutory managers to pay clients who lodged genuine claims subject to the statutory maximum of Sh50,000 per investor," said Mr Micah Cheserem, the former CMA chairman.

Compensation Fund

CMA said it made the payments from the Investor Compensation Fund (ICF), a move that more than halved the fund's balance to Sh193 million from the Sh424 million it had accumulated by June 2009.

Though the payout to Nyaga Stockbrokers investors is expected to help restore confidence in the stock market, it has put into doubt the regulator's ability to do the same for those who lost money in Discount Securities – another broker that collapsed with millions of shillings in investor funds.

On Monday, the CMA said it had sufficient funds to pay those who lost money in Discounts and whose claims have been verified.
"The statutory manager is working on the logistics of the payment process, which is on schedule," said Mr Wycliffe Shamiah, the manager in charge of market supervision at CMA in response to our questions on the matter.

The Investor Compensation Fund draws its money from the 0.01 per cent charge on the sale or purchase of shares at the Nairobi Stock Exchange (NSE), interest accruing on funds received from subscribers to public issues, financial penalties for non-compliance with CMA rules and interest earned from investments.

Mr Cheserem said the settlements began in September 2009 and that 90 per cent of the 27,000 investors, who lodged genuine claims, had been paid.

That position is in line with the CMA report, which shows that the fund was yet to pay Sh11.4 million relating to claims by investors of Nyaga Stockbrokers.

Discount Securities, Nyaga Stockbrokers and Francis Thuo and Partners collapsed over a period of three years with more than Sh2 billion mostly belonging to retail investors.

The capital markets regulator also said in the report that it had developed an early warning system to protect investors from similar loses arising from the collapse of stockbrokers.

"We have developed a risk-based supervision process to proactively identify any challenges experienced by a licensee so that mitigation measures are put in place on time," says Stella Kilonzo, the CMA chief executive.

The report also shows that the regular has intensified its supervision of market intermediaries raising the number of inspections to 157 in 2010 from 149 the previous year.

The increase in market surveillance led to the placement of Ngenye Kariuki and Company, a stockbroker, under statutory management because of "failure to meet client obligations, non-compliance with regulatory requirements, and liquidity problems."

Ngenye Kariuki was not granted an operating licence for the 2011 fiscal year and its directors have been looking for additional capital injection to revive its operations.

Besides the huge payments to Nyaga investors, the ICF balance also suffered an income squeeze with the slowdown in the number of public issues. The fund's income from this segment of the business dropped to Sh12.8 million in 2010 from Sh157 million in 2009. Going by the maximum compensation level of Sh50,000, CMA must find Sh291 million to settle investor claims arising from the collapse of Discount Securities.
Mr Johnstone Oltetia, the statutory manager at Discount Securities, told the High Court in February that the investors would be refunded beginning this month, a move that may further reduce the fund's balance, especially at this time when the market has seen very few public issues; penalties have become scarce and activity remains subdued.

Analysts however said that though the settlements may boost investor confidence in the short term, it should only be used as a last resort.
The Centre for Corporate Governance chairman Job Kihumba, who is also Standard Investment Bank's executive director, said increased surveillance by the CMA would be the most effective method of building investor confidence.

"If you look at the banks, the compensation is set at Sh100,000. If a bank goes under and individuals have a lot more in the banking system, investor confidence cannot be measured in terms of any money paid on these terms," he said.

Mr Kihumba warned that although the settlement amounts look small, increasing it would most likely require that investors pay more to the fund, raising the cost of investing in the stock market that can only erode interest.

"Paying out compensation does increase investor confidence but increasing amounts paid out may discourage small investors," said Mr Paul Orem, the executive director at Dyer and Blair Investment Bank.

"The CMA needs to do is increase market surveillance and encourage better governance so that no other brokers goes the way of Nyaga Stockbrokers."

Over the past one year the market regulator has introduced new capital requirements that require investment banks to hold a minimum of Sh250 million and Sh50 million for stockbrokers.

The CMA has also introduced a back office system for brokers in partnership with the market intermediaries and the NSE, besides risk based supervision.

The market regulator has also been pushing for demutualisation of the NSE and has proposed changes to the Capital Markets Act to gain more supervisory powers.

dmugwe@ke.nationmedia.com

http://www.businessdailyafrica.com/-/539552/1180342/-/view/printVersion/-/xvxwk4z/-/index.html
 
geza, Swaziland's stock market is bigger than DSE. instead of focusing on what is wrong with the NSE which is the 4th or 5th largest stock exchange in Africa, you should be focusing on why the DSE is a constant under performer.

NSE is waay advanced and bigger than any other stock exchange in the EAC. that is not bragging THAT IS A FACT. deal with it!
 
nomasana said:
geza, Swaziland's stock market is bigger than DSE. instead of focusing on what is wrong with the NSE which is the 4th or 5th largest stock exchange in Africa, you should be focusing on why the DSE is a constant under performer.

NSE is waay advanced and bigger than any other stock exchange in the EAC. that is not bragging THAT IS A FACT. deal with it!
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underperforming? it has been awarded Best sustainable stock exchange 2011! si stock exchange ya wezi kama NSE!
 
SHERRIF ARPAIO said:
What about NICOL?
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if NICOL was in NSE it would have not been suspended e.g. the likes of Transcentury are still at large stealing from individuals that"s why NSE is the worst perfoming! At times company that dont meet criteria are listed at NSE!
 
Geza Ulole said:
you are as lame as the Kenyan dudes! who doesn't have those advantages with the rest of the members? i bet u r a disappointing creature to support the weak reasons given by Kenya, institutions are not established based on what you have e.g. another Monetary Institute but a need to exist there!
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I don't blame you..for thinking that we are in the 40s. If you think TZ is best suited and you don't know what to do that is your problem. Let me hope that the TZ lobby team will not have people with the kind of mind set like yours. I bet it is because weak analytical ability you failed to tell that this issue has no room for sympathy among member countries...at the end of the day member states will sit at the table to defend their case... Whoever comes up with some strong arguments will be supported by others and of probably win the chance to host EA cental bank. This is regional issue there is no room for local politics... if you are expecting TZ iangaliwe kwa jicho la huruma. SHAME
 
Mo-TOWN said:
I don't blame you..for thinking that we are in the 40s. If you think TZ is best suited and you don't know what to do that is your problem. Let me hope that the TZ lobby team will not have people with the kind of mind set like yours. I bet it is because weak analytical ability you failed to tell that this issue has no room for sympathy among member countries...at the end of the day member states will sit at the table to defend their case... Whoever comes up with some strong arguments will be supported by others and of probably win the chance to host EA cental bank. This is regional issue there is no room for local politics... if you are expecting TZ iangaliwe kwa jicho la huruma. SHAME
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Good call. Good analysis.
 
Geza Ulole said:
if NICOL was in KSE it would have not been suspended e.g. the likes of Transcentury are still at large stilling from individuals that"s why NSE is the worst perfoming! At times company that dont meet criteria are listed at NSE!
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Ok Gezaulole, lete umeme wa uhakika na kueleweka kwanza then tutafikiriwa
 
Geza Ulole said:
underperforming? it has been awarded Best sustainable stock exchange 2011! si stock exchange ya wezi kama NSE!
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aaawww thats adorable.

liquidity is mediocre at the best at DSE that means although you are sustainable DSE remains irrelevant because it got not much money circulating(compared to other african stock markets). add those ridgid protectionist stock market policies then the picture becomes clear why DSE is smaller than Swaziland's stock market.

it is sad that a country the size of TZ with endless mineral and gas wealth has a smaller stock exchange by any measure than swaziland. that should concern you more than anything else
 
i dont care where the east african central bank will be! all i want is the new east african currency coz am tired of this motherfu...er weak tz shilling!!!!!!!!!
 
nomasana said:
aaawww thats adorable.

liquidity is mediocre at the best at DSE that means although you are sustainable DSE remains irrelevant because it got not much money circulating(compared to other african stock markets). add those ridgid protectionist stock market policies then the picture becomes clear why DSE is smaller than Swaziland's stock market.

it is sad that a country the size of TZ with endless mineral and gas wealth has a smaller stock exchange by any measure than swaziland. that should concern you more than anything else
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Companies can choose to be in a stock market or not! If individuals can have money to finance expansion then why should they enlist? IF the owner are not planning to divest from TZ why should they enlist? You need to grow up to know the essence of stock markets!
 
myhem said:
i dont care where the east african central bank will be! all i want is the new east african currency coz am tired of this motherfu...er weak tz shilling!!!!!!!!!
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even Kenyan shs is not stable!
 
The sizes of DSE and NSE are not vallid justifications for choice of seat of East African Central Bank if you think so you are wrong instead find other criteria. There are only two viable stock exchange markets in Africa namely Johannesburg SE and Cairo SE. The sum total of the entire stock exchange business in African continent per annum is equivalent to one transaction in the NYSE. So what you are arguing is mediocre, find other reasons to make your argument for your support on Dar or Nairobi
 
nomasana said:
what is preventing TZ UG RWA or BUR from lobbying for the same thing??? what are they waiting for??? why should Kenya not lobby to host it??? and what is wrong with kenya trying to be the region's financial hub???
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You shouldn't be repeating what others have already said. What are the convergence criteria for single currency/monetary union? What is the current status for both primary and secondary criteria. Ie inflation rate, budget deficit/gdp ratio, foreign reserve etc. Do you think monetary union and thus a central bank will just fall from the sky. Kenya is fighting for bank that will never be! IS EAC an optimum currency area? But you may bring it dubiously since you know how to cook data!
 
[h=1]Dream of NSE riches turns into nightmare[/h]
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The cheers of KenGen IPO have turned into jeers and tears as stocks consistently underperform. And things are getting chilly on counters: shares are shedding value ahead of the next general election and many investors are scampering for the exit.
By JEVANS NYABIAGE jnyabiage@ke.nationmedia.com

Posted Monday, July 4 2011 at 14:54
Five years ago, at the height of Kenya's stock market boom, an army of over two million new investors, retail and institutional, descended on the Nairobi Stock Exchange (NSE).
There was confidence with all the indicators of a market on a roll. This was manifested in a price rally with all companies that listed during the period – ScanGroup, Equity Bank, KenGen, Eveready, AccessKenya and Safaricom – being oversubscribed by huge margins.
With the sky-high hopes of owning a piece of the blue-chip companies, although some of them may not be necessarily holding the same status in the public eye, many investors generously poured their money into the bourse.
The KenGen initial public offering (IPO) in 2006, for instance, opened the floodgate of retail investors to the NSE with their numbers hitting the then historical record of half a million from less 100,000 before the issue.
The firm's share price jumped to Sh49 from the listing value of Sh11.50 on the first day of trading, generating a massive interest in the stock market that literally pulled small un-sophisticated investors to the trading floor, and made IPO common talk in villages.
Following a series of collapses of a number of stock brokers, however, investor confidence, especially at the retail level, was badly battered.
Since then, things have not been the same and, if anything, a number of stocks are heading south as jittery investors bale out.
"That supreme conviction, which brought two million new shareholders to the market was a valuable thing.
But the conviction was impaired for a variety of reasons, many of which have now been reversed," said Mr Aly Khan Satchu, an investment analyst based in Nairobi.
"Uchumi (Supermarket) is the most symbolic example of that - it was in ICU for more than five years."
A combination of factors, unethical behaviour, fraud, theft and mismanagement, have unleashed untold suffering particularly on the small investors who had entrusted their investments to these firms.
Consequently, in the past three years, there has been an exodus of retail investors. Data from the Capital Markets Authority (CMA), the regulator, shows that small investors cut back their investments in equities from a peak of 27 per cent of the market capitalisation in 2007 to 14 per cent, or Sh152 billion, last year.
The exit, market analysts say, is the direct result of eroded confidence that came with the collapse of four stockbrokers, a bear run that has persisted since 2007 and a movement to alternative investments such as real estate where prices have been on the rise.
"The outlook for the year is not very promising due to underlying factors, with rising inflation, depreciating shilling, volatile interest rates and political uncertainty," said Mr Einstein Kihanda, the chief investment officer at ICEA Asset Management.
With a number of stocks trading below their IPO prices, analysts reckon this year the stock market graph will be trending downwards and most counters will close the year in the red.
"The NSE 20-share index has retreated about 10.6 per cent in 2011 and when you factor in the currency depreciation, then it is a 20 per cent downdraft," says Mr Satchu of Rich Management.
Kenya National Bureau of Statistics latest data show that the country's year-on-year inflation rate increased for the eighth straight month in June to 14.49 per cent from 12.95 per cent in May, driven by higher food and fuel prices.
An analysis by African Alliance Kenya Securities raises the red flag too, saying year-to-date the local stock market performance went down 21.9 per cent compared to North African countries, which have faced uprisings.
"We believe equities in Kenya will continue to under-perform generally for the rest of the year especially for foreign investors who will take a hit on the exchange rate," said Mr Eric Musau, an analyst at African Alliance Kenya Securities. "We do not expect the currency to strengthen in the short-term."
Fund managers say as stock prices continue to fall, many investors are shifting to the fixed income market in a bid to lock in yields in a rising interest rate environment. Analysts warn that this is likely to continue as long as volatility in the market prevails.
"It has not been a good year compared to last year. Share prices have been on the decline," says Mr Isaac Njuguna, head of investments at Zimele Asset Management.
"For sure it is not going to be a good year as share prices point down. Many investors are uncertain of when the market will rebound," he added, "With 2012 being an election year, it will cloud prospects more."
Mr Satchu has a different take, however: "All things being equal, and if the political risk remains in its box, I see the NSE-20 Share Index rallying about 10-15 per cent from these levels. On a Price Earnings Basis the Bourse looks good value."
Prior to the financial crisis, many investors were not as captivated by vehicles such as Treasuries, government bonds and agency securities.
They were perceived as boring and had seemingly become out of date. However, currently interest in many of these staid fixed-income schemes have rebounded among investors and managers alike, and riskier investing has dropped off.
Mr Njuguna says the sweet-deal now seems to lie in short-term bonds of less than two years and government securities such as the 91-day Treasury bill since there is uncertainty as to which direction inflation and interest rates will go, making it safer not to commit funds for too long.
In the past few months, data from the Central Bank of Kenya show that demand for Treasury bills has been on the increase.
The bank's weekly bulletin shows that the government offered for sale Treasury bills and Treasury bonds in last week's auctions to raise a total of Sh20 billion.
During the 91-day treasury bills auction of June 23, 2011 the government offered Sh2 billion which attracted bids amounting to Sh11.5 billion, a 574.0 per cent performance.
Bids amounting to Sh5.8 billion were accepted. In another auction held on June 22, the government offered for sale two-year, five-year and 20-year Treasury bonds to raise Sh18 billion.
The auction attracted bids amounting to Sh19.0 billion, a 105.0 percent performance. The government accepted bids amounting to Sh9.0 billion of which Sh6.7 billion were in two-year treasury bonds.
The average yield for the 91-day Treasury bill was 2.18 per cent in November last year but the latest rate is 8.995 per cent making it an attractive bet.
Even those companies paying the highest dividends, the yields are not able to offer a higher return than the 12.95 rate of inflation.
A weakening shilling and investor caution as the 2012 elections expected to take place in August 2012 approaches make fixed deposits and government securities more attractive.
"There are growing indications that the secondary bond market will perform just as well as 2010 this year, with Sh109 billion already traded during the first quarter of 2011, representing 23 per cent of the total bond turnover for the previous year," says the CMA in its Monthly Bulletin.
"Kenyans in post-KenGen issue fell in love with the bond market and it was largely a one way bet until this year. Bonds were in a sweet spot as inflation crashed to a cycle low of 3.1 per cent last year," Mr Satchu says.
However, the bond market is a cruel and fickle mistress, as investors have found this year. Inflation was last at 14.5 per cent and the bond market has fallen out of bed. Investors are nursing some brutal and violent losses.
Another area that continues to attract capital, Mr Satchu says, is property. "I see it as in a solid medium term uptrend with low beta," he say. "Kenyans are like the British - they have a supreme faith in bricks and mortar and with good reason."
He says an optimised low beta portfolio needs to hold property and shares – which are trading on a low PE (price-earnings) basis.
And as long as interest rates for Treasury bills and bonds remains high compared to returns from the stock market, the bear run will continue to erode investor confidence at the stock market.
Since January the Nairobi Stock Exchange Index has lost 524.81 points to 3969.03 points as at the end of last week from 4,495.41.
Central Bank's weekly bulletin showed that the performance at the equities market declined during the week ending June 23, 2011.
The NSE 20 share index lost 21.7 points to settle at 3,970.6 from 3,992.3 points on June 16, 2011.
Equity turnover shed 34.2 per cent while the number of shares transacted decreased by 59.4 million during the period under review.
New listings coming up
Market capitalisation as a measure of total shareholders' wealth decreased to Sh1.115 trillion from the previous week's Sh1.122 trillion.
Likewise, the Nairobi All Share Index dropped to 90.85 from 91.45 points.
Although analysts point to reduced activity for the remaining part of this year, new listings of British American and Trans-Century will likely jolt the market.
"Not sure if British American IPO will trigger market recovery due to underlying fundamentals. Investors are likely to view the IPO on its own merits," said Mr Kihanda.
"It is all about pricing and I think Britak have erred on the side of caution on that front and therefore whilst it might not ignite the market it will stir it."
Daily Nation: - Smart Company |Dream of NSE riches turns into nightmare

NB: someone was boasting of NSE

 
geza, i can pull out articles talking about how NSE outshines DSE or DSE's policy and structural problems(which are well known) but that doesnt help the discourse

kenyan financial markets are more advanced and developed than tanzania's, Uganda's and Rwanda's markets therefore it makes sense to have the EAC central bank based in nairobi, add the fact that kenya has a bigger skilled workforce. kenya has a strong case to present to EAC and try to host the EAC central bank. the downside for kenya is that kenya is not politically stable as tanzania or rwanda and corruption is rampant.


it is kind of stupid on your part geza to try and convincel us that kenya which is east africa's biggest and most advanced financial market(in east africa) is not qualified to host east africa's central bank.
 
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