Capital Markets Authority is optimistic some of the budget announcements will boost trade at the Nairobi securities Exchange.
It cites relaxation of interest rate caps, establishment of the Kenya Mortgage Refinancing Company and the Kenya Development Bank and revival of the privatisation program as moves that will re-energise trade at the bourse.
CMA is hopeful that repealing Section 33B of the Banking Amendment Act 2016 that capped lending at four per cent above the prevailing Central Bank of Kenya base rate will reverse the negative impact on listed commercial banks.
Chief executive Paul Muthaura said despite significant market developments in the last three years, the level of actual uptakes at NSE has been significantly lower.
Muthaura was speaking yesterday during the release of the authorities soundness report edition seven.
According to the report, it is anticipated that KMRC will leverage on the capital markets to raise funds through bonds on lending to banks and other mortgage financining firms.
In addition, the regulator also expects the bank to leverage on its products to meet the financing requirements of the sector. On listings, the authority has pegged its hopes on revival of the privatization program.
They expect that this programme will stimulate new listings of state owned enterprises and a multiplier effect of private sector entity listing.
Further, the authority is pursuing innovations such as the business incubator, and accelerators to identify a pipeline of companies considered viable to list.
These efforts are expected to provide a platform through which market stakeholders may jointly participate in the process of helping companies meet necessary requirements for listing.
“In anticipation of major positive developments including the relaxation of interest rate caps, political stability, economic realignment with Big Four agenda, capital markets performance is expected to significantly improve,” CMA director of regulatory policy and strategy Luke Ombara said.
He notes that a recovery in private sector investment, increased foreign investor activity and increased market activity within the domestic banking industry will serve as a major reason for market growth.
While that is the case, the regulator announced introduction of incentives to whistle-blowers to motivate more participation in whistle-blowing.
According to Muthaura, the whistle-blowers will receive three per cent of any recoveries made in the Investor Compensation Fund.
He said the decision was made by the board after the Investor Compensation Fund Board was abolished and its management moved to the authority.