TRADING

CMA issues rules to shield the Nairobi bourse amid corona fears

In Summary

•Firms that can complete and file their statements and publish the same within the regulatory timelines have been encouraged to do so

•The assessment of secondary market performance indicates a decline in equity market prices, reflected in the stock indices

Acting Capital Markets Authority CEO Wyckliffe Shamiah.
Acting Capital Markets Authority CEO Wyckliffe Shamiah.
Image: COURTESY

The Capital Markets Authority (CMA) has issued fresh guidelines to help market players cope with the economic effects of the coronavirus.

“The authority as a responsive regulator is sensitive to the unfolding financial situation affecting market players and has relaxed disclosure obligations in relation to the publication of financial statements in two newspapers of national circulation until 30 June 2020.” CMA acting chief executive Wyckliffe Shamiah said.

He said that the deadline for all the licensed intermediaries, issuers of securities to the public, collective investment schemes and other approved persons with timelines for submission and publication of audited financial statements in March and April 2020, was extended by one month respectively.

 

However, firms that can complete and file their statements and publish the same within the regulatory timelines, are encouraged to do so to ensure investors obtain information in a timely manner.

To ensure timely and seamless flow of the required information to the investing public, CMA directed that all required disclosures be published on their own websites and social media platforms; the Nairobi Securities Exchange website for all issuers and trading participants; and the CMA website by all entities affected by this guidance.

Firms that do not have challenges in publishing the same in the newspapers are encouraged to do so. Firms subject to other regulatory obligations beyond those of the CMA were advised to engage the relevant regulator(s) where an obligation may have been altered by the Authority’s guidance but is applicable under a different regime outside the authority's mandate.

The assessment of secondary market performance indicates a decline in equity market prices, reflected in the stock indices, with the NSE-20 share index declining by 4.9 percent last week, compared to the significant decline of 11.5 percent in the previous week according to Shamiah.

The performance of the Kenyan market seems to be better off than many securities exchanges globally while mixed performance is expected among listed companies as some of the sectors of the economy may be more affected than others.

The exit by some foreign investors from the market has also created an opportunity for local retail and institutional investors to take advantage of the undervalued shares of listed companies.

Domestic institutional investors such as pension schemes, collective investment schemes and insurance companies with a long-term investment horizon are encouraged to invest in listed blue-chip companies listed during this period.

This must, however, be subject to existing limits on asset class investments set out by their respective regulators.