CMA asks tech firms to follow global trends to dominate NSE

Airtel recently hinted about listing 30% stake on the Nairobi bourse

In Summary
  • Tech firms are commanding stock exchanges globally
  • Kenya's capital market has performed poorly since 2020, with NSE not attracting a single new listing for almost a decade now
CMA chief executive Wyckliffe Shamiah.
CMA chief executive Wyckliffe Shamiah.

Kenya has strong prospects for capital raising and listing of technology firms, thanks to its growing technological infrastructure.

Speaking at the release of the third quarter Soundness report, Capital Market Authority (CMA) chief executive Wyckliffe Shamiah challenged tech firms to consider diversifying investments in capital markets, saying the sector is controlling the global economy. 

"We are ready to guide both large technology firms and start-ups to our different sets of listing products. Tech firms are controlling market capitalisation on almost all major stocks in the world,'' he said. 

Safaricom Plc continues to enjoy the monopoly at NSE's technology counter, controlling almost 50 per cent of the bourse's total wealth that recently sunk to an all time low of Sh1.38 trillion. 

On Tuesday, Safaricom's share closed the market at Sh12.50, having shed almost four-fold since August 2021 when it hit an all-time high of Sh43.

CMA's plea to technology firms is coming less than four months after the country's second leading mobile network provider, Airtel Kenya announced plans to list on the Nairobi bourse. 

“As part of our license obligation, there's a requirement to list in Kenya. For the last couple of months, there's been discussion around whether that condition is going to be changed or is going to stay," Segun Ogunsanya, the Group CEO of Airtel Africa said in a media transcript on its website.

He said they are still waiting for clarity from Kenya whether there's still an obligation to list.

The plans to list follow a policy change in Kenya that will take effect in April next year. Kenya's licensing policy give telecoms firms up to March 2024 to ensure local ownership of at least 30 per cent.

It has increased the local ownership threshold from a minimum of 20 percent, a cap that has been in place since 2008.

Tech firms are commanding stock exchanges globally. For instance, tech giants head the world’s top two exchanges, the New York Stock Exchange (NYSE) and the Nasdaq, which command 42.4 per cent of global market capitalisation. 

The NYSE worth $25 trillion and the tech-heavy Nasdaq's $21.7 trillion are home to many of the world’s most valuable firms, from Apple to Nvidia.

Since 2016, the NYSE has grown 35.1 per cent while the Nasdaq has ballooned 189.3 per cent in market cap.

With $7.2 trillion in market cap, tech filled Euronext is the world’s third-largest exchange. Since Brexit, the pan-European exchange has attracted more capital and by early 2021.

Kenya's capital market has performed poorly since 2020, with NSE not attracting a single new listing for almost a decade now while local bonds and bills are grossly undersubscribed. 

Early this month, NSE was ranked the worst performing African bourse in the first nine months of the year in dollar returns, highlighting the impact of foreign exits and global shocks on East Africa’s biggest stock market.

The ranking on the Morgan Stanley Capital International (MSCI) Index, a key source of investment information for foreign investors follows the decline of the NSE All Share Index.

The MSCI Index that tracks three Kenyan blue chips—Safaricom, Equity Group and EABL— found that the Kenya Index shed 41.9 per cent, to stand at 627.4 points, with the Zimbabwe Stock Exchange coming as the second worst performer at negative 34 per cent.

According to CMA, the blue-chip NSE 20 Share Index retreated by 10 percent to 1508 points in the nine months to September 2023, while the NSE All Share Index was down 25.3 per cent to 95.2 points.

Investor wealth as measured through market capitalisation dropped by 498.4 billion in the period to stand at Sh1.487 trillion.


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