The Capital Markets Authority has stepped up plans to launch a platform to enable domestic companies issue shares in other countries without cross-listing on stock exchanges in those countries.
The regulator has partnered with Citibank to create global depository receipts aimed at deepening the domestic market.
“The idea is we create the global depository notes where we can attract a local currency-denominated investment to a global market and they trade in a global environment,” Citibank East Africa chief executive Joyce-Ann Wainaina said.
As part of implementing its 10-year Master Plan ( 2014-2023 ), CMA is crafting new regulations to facilitate development of new products in a bid to diversify Kenya’s capital markets.
Some of the products launched this year are Exchange Traded Funds and the government’s retail infrastructure bond, M-Akiba. CMA chief executive Paul Muthaura said focus has now shifted to global depository notes.
“Our market which has been traditionally very equity and debt focused, is finally diversifying with opportunities that are coming from the new products with the prospects of seeing some global depository receipts potentially being issued in the near future,” Muthaura said.
A global depositary receipt is a bank certificate issued in more than one country for shares in a foreign company, according to Investopedia. The shares are held by a foreign branch of an international bank.
The shares trade as domestic shares but are offered for sale globally through the various bank branches.
The global depository receipts are seen as vehicles to support growth of the country’s national savings and investments from less than 15 per cent of gross domestic product to 30 per cent as stipulated in the Vision 2030.
“The truth is that we have very low savings rate in the country, so trying to imagine a world where we can encourage saving and get local investors to meet our development ambitions would be ideal,” Wainaina said.
Kenya National Bureau of Statistics Data shows that gross national disposable income increased by 14.7 per cent from Sh6.53 billion in 2015 to Sh7.42 billion in 2016, which is 16.10 per cent of GDP.