The Nairobi Securities Exchange(NSE) remains unattractive to new listings due to a bear market that has persisted for close to a decade.
- The Nairobi bourse has been on an IPO drought for a decade since the bourse itself self-listed in July 2014.
- It has also suspended trading in 4 counters and delisted five others.
- Ilam Fahari I-Reit, a real estate firm, is the latest to announce its delisting from the NSE.
According to Wycliffe Shamiah, Capital Markets Authority (CMA) CEO, over three firms that had indicated plans to list at the NSE have frozen these plans due to a bear market that has seen a decline in prices and level of activity at the bourse. Firms that want to come to the market have been discouraged by the high cost of listing, increased taxes, and fluid bearish conditions at the NSE, which could dampen their share prices if they were to list.
On the list of firms that have put on ice plans to list at the NSE include Credit Bank.
Local investors in blue chips such as Safaricom, East African Breweries Limited Plc(EABL), and KCB have lost significantly as a decline in share prices wiped out paper wealth. This is as foreign investors, who are key players at the bourse, take flight to more lucrative markets such as the USA and Europe.
The bourse has also caused huge losses to investors who had bought into several counters, including Kenya Airways and Mumias Sugar, where trading remains suspended.
- KQ shares have been suspended from trading at the NSE since July 2020.
- This suspension was triggered by the tabling of the National Aviation Management Bill 2020.
- The bill sought to effectively re-nationalize KQ through the establishment of the Kenya Aviation Corporation.
The company was first privatized in 1995 when 26% of the shares of the company were sold to KLM Royal Dutch Airlines and then in 1996, in an initial public offering of the company’s shares in the biggest share offering in Kenya’s history at that point, which was oversubscribed by 82%.
While the NSE began experiencing bearish conditions in 2015, this situation has recently been strengthened by a rapidly weakening shilling and shortage of dollars, both of which are a major for foreign investors.
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