NAIROBI, Kenya, Feb 11- The Nairobi Securities Exchange (NSE) is in 2012 anticipating to shake-off the poor performance it registered last year by welcoming new companies to the bourse.
NSE Chairman Eddy Njoroge disclosed on Friday that five firms are this year expected to use the bourse as an avenue to raise their capital, a move that should go a long way in restoring the vibrancy of the market.
“We shall continue to support such transactions that provide value to the shareholders, employees and our economy,” he pledged.
Last year, the exchange took a beating to reflect the challenges such as a volatile exchange rate, high inflation and soaring interests and uncertainties that were being experienced in the macroeconomic environment.
Consequently, its overall market indicator, the NSE 20 share Index dropped by 27.7 percent having closed the year at 3205.02 points down from 4,433 points reported at the end of December 2010.
The poor show was despite the listings of CFC Insurance Holdings, TransCentury, British American Investments Company (Britak) and the re-listing of Uchumi after a five year suspension.
Njoroge however said they are banking on the entry of companies such as Deacons, CIC Insurance, Family Bank and UAP Insurance that have all announced their intentions to become public companies through listing by introduction and issuing an Initial Public Offer.
Such confidence should help bolster the exchange and should be reflected in the 20 share index which during the week shaved off 36.19 points to close Friday at 3160.51 points.
In addition, the growth of the NSE will be aided by the introduction of different segments that will help to bring in more people on board and hence unlock the vast potential that exists in mobilising resources via the capital markets.
And following on the introduction of FTSE NSE Kenya 25 Index and FTSE NSE 15 Index done in conjunction with the FTSE International last year, Njoroge said the next step would be to launch a government bond index.
“We are working on introducing a Treasury Bond Index, which we believe will enable our investors to accurately measure the performance of their bond portfolios,” the chairman affirmed.
The bourse also has the interests of the small and medium sized enterprises in mind and is also in the process of setting up the Growth Enterprise Market Segment (GEMS), a Mid Cap Market Segment to facilitate the listing these firms.
“The Board of the Capital Markets Authority approved the rules and regulations for GEMS. The regulations will now be forwarded to the Minister for Finance for
gazettement and the market is expected to be operational in the second half of 2012,” he stated.
Their positive outlook is also informed by the benefits that will be accrued once the process to separate the private ownership of the bourse from the management is fully implemented.
The High Court last week paved the way for the demutualisation to proceed after it dismissed a case by collapsed stockbroker Francis Thuo & Partners that was seeking allocation of a stake in the exchange once the process was completed.
“Demutualisation of the NSE is a statement of our commitment to transparency and good corporate governance and that this improved governance is critical in attracting investors and increasing opportunities to raise debt and equity through the capital markets,” Njoroge concluded.