NSE challenged to attract local investors to curb volatility

The Nairobi Securities Exchange has been urged to come up with more products to woo local investors and reduce exposure from foreigners.

According to the Barclays Africa Group Financial Markets Index 2017, which assessed the maturity and openness of financial markets on the continent, there is a big gap between the number of financial instruments owned by local investors and those in the hands of foreigners.

The Barclays Africa Group’s head of markets, George Asanti said the ‘sea gap’ on the Nairobi bourse exposes the market to volatility, especially when foreign investors decide to buy or sell.

“Having local investors is critical because they are a buffer to volatility. With a strong local investor base, any time a foreign investor wants to move out of the marker it is not really a problem because you will have a local investor to take up the stake.”

Kenya was ranked fifth with an index of 31 out of 100 as South Africa (100), Namibia (94), Botswana (49), and Mauritius (38), ranked higher in having strong capacity of local investors.

Diversify

Speaking in Nairobi during the release of the report that also ranked the NSE as the fifth best overall market in Africa among the 17 markets that were analysed, Mr Asanti said NSE needs to diversify from equities and fixed income products to capture the market.

“We don’t believe there are enough instruments and innovations to capture the market. That also translates to the gap we see on the market,” he said.