NSE downturn hurts intermediaries

August 18, 2009
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, NAIROBI, Kenya, Aug 18 – The reduced trading volumes at the Nairobi Stock Exchange (NSE) continues to take effect on companies that rely on the commissions charged on the bourse’s activities.

The declining performance in the first half of the year has seen CfC Stanbic Financial Services (CSFS) record a Sh51 million loss compared to a profit of Sh55.8 million posted in the corresponding period last year.

“The market activity has reduced significantly. We are probably doing 75 percent of the trade activity during the five year bull-run to the end of 2008.  This has resulted in a 76 percent drop in commission incomes for us,” said CSFS Managing Director Nkoregamba Mwebesa while releasing the results which also showed that revenues declined to Sh60 million.

CSFS is the first brokerage firm to comply with the Capital Markets Authority’s directive that requires licensees to publish half year and full year figures within two and three months period respectively.

Mr Mwebesa added that the global financial crisis and reports of financial scandals at the bourse compounded the issue as they saw reduced participation and investments from foreign investors and Kenyans in the Diaspora.

Although the market has not been robust in the July and August months Mr Mwebesa was however hopeful that the market will improve next year as it had in June when the volumes picked up substantially.

“We know that a rebound is going to happen; we have enough resources to see us through the downturn. We believe 2010 will be a better year we should see improved activity in the second half of the year but we will continue to follow our strategies,” he said.

Part of these strategies would enable them to grow their business and retain their position as a market leader with a (market) share of 8.5 percent.

“One of the issues that we will be looking at is the repositioning of our business to focus more on corporate institutional clients both local and foreign to bring a balance to what was purely a retail business,” he explained.

He said CSFS, which is a part of Standard Bank Group, would take advantage of the operations and network that the Group has in Nigeria, Johannesburg, London, Moscow, Turkey and New York to bring in more foreign investors.

These investors contribute about 15 to 20 percent of the activity at the stock exchange but the player is looking at increasing this.

Mr Mwebesa also added that they had invested greatly in technology to ensure the company delivers quality services to their customers.

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