NAIROBI, Kenya, Sep 6 – The Nairobi Stock Exchange (NSE) still presents a good avenue for saving and raising funds despite the current bear run that has eroded the value of many counters, the chief executive says.
This is one of the lessons learnt at the end of the third NSE investment challenge, which is an online simulation of live trading involving young people and which saw the winners make a return on investment that was above the market performance.
“The winning team were able to generate a return of Sh948,000 on their initial sum of Sh2 million which is a return of 47 percent in a three-month period,” said NSE Chief Executive Officer Peter Mwangi of the competition which ran from May to July this year.
Each participating team gets Sh2 million virtual start-up capital to trade with using the NSE real time prices for a period of three months with the winner being the side with the highest portfolio value.
“In that period, the NSE 20-share index dropped by seven percent meaning that these youngsters were able to outperform the market by 54 percent in one quarter,” he reiterated while commending the winners from Daystar University.
The students were among the 4,064 participants who registered for the challenge which represented a 72 percent increase over last year.
Given that the sponsors were able to reach 8,530 students, they felt that this points to the challenge’s suitability as an innovative delivery channel with a wide reach.
And building on this success, Mr Mwangi disclosed that they intend to broaden future challenges to include youth groups and young people who are not in tertiary institutions.
“We should be able to reach out to youth that are organised in other ways but not necessarily students. They could be members of sports clubs or a youth club but whatever they are organised to do, everyone needs to be able to learn how to manage their own money,” the CEO stressed.
Besides educating the participants on the market dynamics, the sponsors who include NIC Securities and Smart Youth Investments Limited hope that through the game, they will also help instil and increase financial literacy and responsibility among Kenyans.
“We reiterate our desire to instil specific financial virtues among Kenyans’ investment habits. Top among them is the disciplined regular build up of wealth. This can only be enhanced by saving regularly through appropriate investment vehicles like equities and fixed incomes,” emphasised NIC Securities Research Analyst Samuel Gichohi.
Another key objective is to ensure that Kenyans become savvy investors who are led to invest not by sentiments but who make decisions based on knowledge about companies and market fundamentals.