Kenyan bourse buoyant

March 18, 2010
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, NAIROBI, Kenya, Mar 18 – The rally witnessed at the Nairobi Stock Exchange (NSE) in recent months continues to give players the confidence that they will record improved performance this year.

Kingdom Securities Managing Director Geoffrey Odundo said on Thursday that the market had begun showing signs of recovery with the NSE 20 Share index breaching the 4,000 point mark this week.

“We are happy that in the recent past the market is recovering and we believe that this will be sustainable and this is welcoming given the difficult challenges that we had in 2009,” he said.

The bourse has experienced a bear run since 2008 due to internal and external factors which resulted in reduced market activity and saw the index shed off over 2,000 points while the turnover and commission income on the NSE dropped by 75 percent.

The brokerage industry was particularly affected by the declining performance of the market which saw many firms post loses and resort to measures such as retrenching of their staff and closure of certain branches.

During a press briefing to announce the broker’s annual results in compliance with the Capital Markets Authority requirements, Mr Odundo said they posted a Sh19.6 million loss for the year ended December 31, 2009 compared a profit of Sh7.36 million the previous year.

“The company was only in operations for six months last year and that was really an establishment year for it,” Mr Odundo said.

Total revenues increased by 95 percent to Sh12.95 million in 2008 to Sh25.37 million in 2009 while operational costs went up from Sh20.3million to Sh45 million.

Kingdom Securities is a subsidiary of Cooperative Bank and was formed when the bank acquired a 60 percent stake in financially troubled Bob Mathews Stockbrokers last year.

Since the acquisition, the broker’s client base has risen from 13,000 to 170,000 thanks largely to it 250 retail-outlet network which rides on the back of the extensive cooperative societies movement, the bank’s branches and independent agents.

Through this network, the broker has been able to spread its reach within the country and is looking at providing potential retail investors and the 12 million cooperative movements’ members with an easier and cheaper way to access stockbrokerage services.

“We know Saccos have their own investment limits so we are using them as our distribution points so that their members are able to access their stock broking services through their own offices,” the MD said.

With a capitalisation base of Sh50 million as required of all brokers by the end of the year, Mr Odundo forecasted that the business was well positioned to make a good return for its shareholders while giving Kenyans with an easier platform on which to get into the capital markets.

“2010 will be a key performance year for the company as it will be the first full year of operation for the company. At the moment the company is breaking even on a month to month basis,” he added.
 

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