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Why the capital markets is not attracting investors

By Otiato Guguyu | Published Tue, July 3rd 2018 at 14:42, Updated July 3rd 2018 at 14:46 GMT +3

NAIROBI, KENYA: A new study shows that betting is driving investments away from the country's capital markets as Kenyans opt for quick cash over long term returns and building the economy.

The Capital Markets Authority, which is seeking to increase the number of listed companies under its ten year master plan, conducted the Low Uptake of Capital Markets Products and Listings survey in April- June 2018.

The study found out that investors also feel that they could get more money from investing in real estate and speculating over the short term rather than put money in the stock market.

"The CMMP (capital market master plan) set down a clear target of achieving 3-4 GEMS listing annually but this target has not been achieved despite concerted industry efforts. New products have also been introduced with low uptake witnessed,” said CMA Chief Executive Paul Muthaura.

The Gems section was expected to list 19 firms by 2017 and 39 listings by 2023 has only attracted five firms since it was launched in 2013.

In 2016, only one firm, K-Shoe subscribed to the market joining HomeAfrica, Kurwitu Ventures, Flame Tree Group and Atlas Development in the segment.

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Businesses fear listing because they have witnessed other firms lose credibility after their share price pummelled due to price corrections and market valuations after listing.

“The study identified the key factors leading to low product uptake including reputation risk exposure for potential issuers to post-offer/listing price correction following professional valuation,” the CMA boss said.

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