NSE unveils measures to attract foreign capital inflows

By James Anyanzwa

Nairobi Stock Exchange has announced new measures to attract foreign capital to boost liquidity.

The new measures include introduction of branded equity and Treasury bond indices, and re-classification of the business segments for listed companies.

The bourse’s Chairman, Eddy Njoroge, said the proposed indices would run concurrently with the NSE 20-Share and NSE All Share indices. Njoroge pointed out that the branded indices would give NSE the opportunity to use global index provider’s expertise to design, manage and distribute branded indices and index related products. He added that the Treasury Bond index would enable investors gauge the performance of their bond portfolios.

"Overall, the indices should improve capital flows into the domestic market and enhance liquidity and market capitalisation," said Njoroge.

Bell ringing

Njoroge pointed out that the NSE was working in collaboration with a global index provider to implement the project. He was speaking during a bell ringing ceremony to mark the commencement of trading of the British American Investment Company Ltd shares on the NSE on Thursday.

Njoroge said the new method of classifying business segments of listed companies places equities under 10 industry sectors, while debt securities – including preference shares – are under three categories. "We are convinced that the reclassification will provide a more accurate reflection of the diversity of the companies listed at the NSE, and by extension, reflect the increasing diversification of our economy," said Njoroge.

His remarks comes after the NSE’s persistent bear run, occasioned primarily by drought, rising inflation, volatility of the local currency, weaker growth projections and the institutional investors concern over excessively indebted European economies, and the unstable American economy.

This has seen the NSE 20-Share index drop below the 4,000 mark for the first time since April. On Wednesday, Market turnover declined 21 per cent as foreign investor participation dominated the bourse at 74 per cent. Overall, 20 counters notched higher while 14-posted declines.

"We, however, remain bullish, and are confident that this trend will reverse in the not too distant future," said Njoroge.

He said the NSE would continue to innovate and enhance its capacity to serve investors better.

He also pointed out that the proposed demutualisation of the exchange could be effected by September 30, after gazettement of the Capital Markets (Demutualisation of the NSE regulations.

Once done, the NSE would be converted to the Nairobi Securities Exchange Ltd.