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Falling share prices cuts NSE profits

Foreign investor participation in this market averaged 64 percent over the same period, a 6 percent increase from 2015.

NAIROBI, Kenya, May 31 – A bear market in 2016 has cut Nairobi Securities Exchange profits by nearly 40 percent reporting a profit of Sh184 million for the year ending December 2016 from Sh306 million in 2015.

NSE Chief Executive Geoffrey Odundo says the bear market has led to a 30 percent decrease in equity turnover to Sh147 billion during the period.

“We have revenues from equities and bonds. 90 percent of our revenues comes from levies, so what happened in 2016 is that from January up to around September, we witnessed a continuous decline in terms of volumes,” Odundo said during the company’s AGM in Nairobi.

He added the market – which is 70 percent depends on foreign trades – experienced shocks as a result of falling oil prices.

Interest income declined by 6 percent due to lower interest rates on bank deposits held in the year compared to 2015.

The capping of interest rates in August of 2016 saw bank stocks particularly hit with millions of shareholder wealth lost immediately after the law was enacted.

Equally, equity trading volumes decreased by 15 percent from Sh6.8 billion units in 2015 to 5.8 billion units in 2016.

The NSE 20 Share Index for the first time went below the 4,000 points end of 2015 to 3,186 points in 2016, a decline of 21.15 percent even as market capitalization declined to Sh1.9 trillion from 2 trillion.

The company is implementing a product diversification strategy that will see the introduction of a derivatives market, Exchange Traded Funds and other new products to broaden income base.

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