Firms burn their fingers as bourse investment drought bites

Traders check out the trading index during the Bell Ringing ceremony for KENGEN to trade at the NSE at the NSE's offices in Westlands,Nairobi. Photo/Elvis Ogina (Nairobi) July 6th,2016.

The investment drought at the Nairobi Securities Exchange (NSE) cost agents and stockbrokers millions of shillings last year.

Capital traders and subsidiaries of big banks reported losses due to stagnated market activity amid rising costs of operation.

Yesterday, KCB Capital announced a 152 per cent drop in net revenue to make a loss of Sh1.3 million for the year ended December 2016, from Sh2.5 million in profit in 2015.

AIB Capital also posted a Sh53 million fall in net earnings, a 189 per cent drop in profitability, to register a Sh25 million loss from a profit of Sh28 million last year.

Stanbic Bank’s SBG Securities slipped after it posted a net loss of Sh7.36 million, a steep drop from its Sh216.6 million net profit in 2015.

PineBridge Investments, which was recently acquired by Sanlam Emerging Markets, reported a Sh5 million decrease in net profit for 2016.

The market regulator has blamed the lacklustre performance last year on delays in the resolution of assets for troubled lenders, including Chase and Imperial banks.

“Investment banks that usually act as transaction advisers have also been affected because of the decline in the application of new issues by institutions, especially banks,” said the Capital Markets Authority in a report.

The delayed resolution to the receivership of Chase and Imperial banks has locked Sh18 billion out of the stock market. Restrictions on fixed deposits and bond proceeds have withheld the money for almost one-and-a-half years, scaring away corporate bond investors.

The Sh4.8 billion corporate bond issued by Chase Bank has been suspended from trading, while Imperial Bank’s Sh2 billion bond was suspended in October 2015.

The market that has seen a near freeze in activity and a bear run on equity prices has punished NSE Ltd, which gets 53 per cent of its revenue streams from market trading.