Market bosses explain slump

September 25, 2008

, NAIROBI, September 25 – Reduced remittances from Kenyans in the Diaspora, the forthcoming United States elections and the adoption of a ‘wait and see’ attitude by donors are some of the reasons being blamed for the bearish stock market.

Breaking the silence on Thursday over the on-going debate on what could be causing the constant decline of share prices on the bourse, the Nairobi Stock Exchange and the Capital Markets Authority listed the above factors as some of the causes of the problem.

NSE Board Chairman James Wangunyu said the gradual decline in share prices was not unique to the country, since the global recession had been catalysed by a recession in the global markets as a result of rising oil prices and inflation which is beyond the control of the exchange.

 “Though the oil price rally has eased a bit, plans by the U.S treasury to purchase $700 billion worth of mortgage debt from troubled financial institutions, plus the rescue of AIG to the tune of $85 billion – the outcome of which is uncertain – has not made the situation any better,” he said.

Mr Wangunyu revealed that statistics compiled in April this year show that the Nairobi Stock Exchange 20 share Index had lost 1.09 percent of its value compared with 16.12 percent, 12.53 percent and 4.15 percent for the Egyptian, Nigerian and other South African benchmark indices.

“We believe very strongly that this is the time for the market participants to take advantage, cognisant of the fact that our financials and the fundamentals of the market have not changed at all and so come and take control of the market,” he urged.

Meanwhile Capital Markets Authority boss Stella Kilonzo reaffirmed the regulator’s commitment to manage the risks to the trading systems in the country and the region.

Kilonzo explained that this would be achieved by ensuring that the intermediaries in place have adequate capacity and stability through the introduction of multi-level checks on operations, regional certification programmes and mutual recognition of the intermediaries in the region

“It is upon each and everyone of the stakeholders in our market to take on the mantle as a leading securities market to ensure that we can continue to grow and take up our place as a recognized player on the global front,” she emphasised.

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