In this episode, we talk to Anthony Kirui, Director, Head of Global Markets, Kenya and Africa Regional Operations at Absa Bank Kenya PLC, on the status of Kenya’s capital markets, specifically looking at improving access for retail investors, heading against foreign outflows and moving away from safe bets like government securities. This episode follows the release of the 2021 Africa Financial Markets Index, where Kenya’s market attractiveness fell to 11th position in Africa, scoring especially poorly in its local investor capacity. We explore possible remedies such as breaking barriers for retail investors, adoption of global master agreements, and how day trading and margin trading could help private individuals flourish in the domestic markets. Here are some of the key discussion points.
On deepening domestic markets and hedging the domestic markets from foreign outflows:
Adoption of global master agreements like the GMRA (Global Master Repurchase Agreement), which combined with the CSD, allows for participants and intermediaries in the market to make two-way prices on government securities and create a market. This triggers liquidity which allows for healthy turnovers for both global and local investors.
On improving the participation of young people in the market:
Developing day trading and margin trading and infrastructure to support mobile apps that allow retail investors to participate in the markets.
On moving away from safe bets like government securities:
Pension fund managers sit investments that are generally not liquid, which bars them from trading their securities when they rally as they worry about how they will reenter and whether they will get the liquidity when they exit. We need infrastructure and agreements to support security borrowing and lending, which will allow pension funds to lendscript to people looking to short an asset and allow investors to participate in the movement of a stock in either direction.
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