CMA Warns About Dominant Firms at The NSE

The Capital Markets Authority(CMA) has sent out an alarm over what it terms as the dominance of five listed firms at the Nairobi Securities Exchange(NSE).

In its Q1, 2020 Soundness Report, the Authority mentioned that the top five companies by market value currently account for nearly 74.14% of the NSE market capitalization, the highest in the last four quarters, further increasing the exposure risk that the Kenyan market faces.

These firms are; Safaricom’s KSh1. 2 Trillion Market Capitalization, which makes up 60% of the value of NSE listed firms. It is followed by Equity (KSh 188 Billion), EABL (KSh 169 Billion), KCB Group (KSh 167 Billion), and Co-operative Bank (KSh 89. 4 Billion).

CMA warned that Market concentration remains a key risk within the Kenyan Capital Markets landscape. According to the Capital Markets Soundness Report (CMSR), Volume XIV, a quarterly report covering the period between January-March, 2020, the Authority said it intends to diversify the number and quality of listed entities.

This will be achieved through working with market players – Privatization Commission, Kenya Private Sector Alliance, Kenya Association of Manufacturers amongst others to identify potential issuers within the Kenyan market – both large-cap and SMEs as a way of increasing diversity.

CMA maintains a positive outlook as some companies have expressed interest in going public within the next 2 to 3 years.

Jamii Bora, Vitaform, and Tuskys are on the list of firms that have already expressed interest in joining the bourse.

The Nairobi Securities Exchange (NSE) crafted the Ibuka program which nurtures Kenyan firms and prepares them for listing.

Companies under the Ibuka program include Homeboyz, APT Commodities Limited (APTC), Globetrotter Agency Limited, Moad Capital Limited, and Bluenile Rolling Mills Limited