Nairobi has already been a financial hub for eastern and central Africa long ago. Nairobi Stock Exchange is way far ahead of DSE. There are so many regional offices for international organizations and even the global multinational companies.
Do we have any regional offices for these international organizations in Dar? I think it's a valid argument to host the EAC central bank where the financial hub has the presence already.
the worst performing stock market in Africa, the likes of Nyaga stock brookers (thieves) were groomed here! go and sleep if that is your strongest argument esp. when men are talking and don't bring your boasting here! NSE is a stealing machine the likes of Kibaki, Kirubi et al have been using that institution to cover up their theft! BTW what makes you think having international organizations qualify you better than the rest today"s world is a high tech one, logistics are there to make the office be anywhere!
Analysts rank Kenya's stock market poorly
FREDERICK ONYANGO| NATION Analysts say that the Kenyan stock market is the worst performing in Africa with matters made worse by the weakening shilling.
By JEVANS NYABIAGE,
jnyabiage@ke.nationmedia.com
Posted Tuesday, June 28 2011 at 19:32
Kenya is the worst performing stock market in Africa, according to analysts.
The latest update from the African Alliance Kenya Securities says that year-to-date the local stock market performance went down by 21.9 per cent in US dollar terms compared to North African countries, which faced uprisings earlier in the year.
Their report comes as the cost of living continues to increase under a fast depreciating shilling.
"We believe equities in Kenya will continue to under-perform generally for the rest of the year especially for foreign investors who will take a hit on the exchange rate," said Mr Eric Musau, an analyst at African Alliance Kenya Securities. "We do not expect the currency to strengthen in the short-term."
As at Friday, June 24, 2011, on week-on-week, turnover declined to Sh1.15 billion from Sh1.94 billion. NSE 20 Share Index was down by 0.40 per cent during the week to stand at 3969.03 points.
Mr Musau said that while the Kenya shilling has retraced some of the losses it experienced, it is still the worst performing currency in Africa year-to-date. It is 12.1 per cent weaker against the US dollar, 14.0 per cent lower to the Japanese yen, 21.4 per cent off to the euro and 9.7 per cent against the South African rand.
With the rising inflation and unstable Kenya shilling, analysts say essential imports will become more expensive. At an average inflation of 12.95 per cent last month, up from 12.05 in April, low income earners are hit the most.
During the month, said the African Alliance analysts, low income earners experienced an inflation rate of 13.97 per cent, the middle income bracket had 8.74 per cent while high income earners had an inflation of 6.18 per cent. Other provinces, except Nairobi, had an inflation rate of 13.31 per cent.
"Inflation appears skewed towards the most vulnerable in society. The discretionary spending of the high income earners remained relatively insulated while low income earners have been most affected," said Mr Musau.
He warned that the Central Bank of Kenya's monetary tightening in a bid to tame rising inflation and the weakening currency may slow economic growth, which could affect the banking sector through lower borrowing.
"If this slows substantially, we could see interest income as well as non-funded income affected leaving little room for banks apart from cutting costs. The banks are already resetting their lending rates upwards in anticipation," he said.
Commercial Bank of Africa (CBA) and I&M Bank will be adjusting their base lending rates next month.
CBA said recently that it would be raising the rate of its loans denominated in Kenya shillings from 13 per cent to 14.5 per cent from July 11 while I&M Bank would push up its lending rates from 13.5 per cent to 15 per cent effective July 1.
"Volatility in the currency will also see very strong growth in foreign currency income," said Mr Musau.
"We see inflation worsening before getting better, easing towards the end of the year when harvests start."
Ms Razia Khan, Standard Chartered Bank's head of Africa research, said in a briefing last week that inflation may rise to slightly above 20 per cent later this year if the shilling continued to depreciate and food and fuel prices remained high.
She said food and fuel price increases were largely to blame with the weakness of foreign exchange making matters worse.
Tuesday morning, commercial banks quoted the shilling at 90.00/30 against the dollar, stronger than Monday's close of 90.70/91.00.
On the good side, however, Mr Musau said exports with substantial domestic content were likely to be more competitive in the global market with non-essential imports expected to reduce and foreign direct investment may start to pick up.
http://www.nation.co.ke/business/ne...904/-/view/printVersion/-/8rckw3/-/index.html
Investors paid Sh281m for losses at Nyaga Stockbrokers
Investors who had lost their money outside the Nyaga Stockbrokers offices in Nairobi in 2006. Those who filed genuine claims will be paid Sh281 million. File
Stock market investors - who lost their money with the collapse of Nyaga Stockbrokers - have been compensated to the tune of Sh281 million following a ground-breaking payment in the 56-year history of the Nairobi Stock Exchange.
Disclosure of the payments has been made in the Capital Markets Authority's (CMA) financial report for the year ended June 30, 2010.
"To ensure investors who lost their funds through Nyaga Stockbrokers Limited did not suffer any longer, the CMA worked with the appointed statutory managers to pay clients who lodged genuine claims subject to the statutory maximum of Sh50,000 per investor," said Mr Micah Cheserem, the former CMA chairman.
Compensation Fund
CMA said it made the payments from the Investor Compensation Fund (ICF), a move that more than halved the fund's balance to Sh193 million from the Sh424 million it had accumulated by June 2009.
Though the payout to Nyaga Stockbrokers investors is expected to help restore confidence in the stock market, it has put into doubt the regulator's ability to do the same for those who lost money in Discount Securities – another broker that collapsed with millions of shillings in investor funds.
On Monday, the CMA said it had sufficient funds to pay those who lost money in Discounts and whose claims have been verified.
"The statutory manager is working on the logistics of the payment process, which is on schedule," said Mr Wycliffe Shamiah, the manager in charge of market supervision at CMA in response to our questions on the matter.
The Investor Compensation Fund draws its money from the 0.01 per cent charge on the sale or purchase of shares at the Nairobi Stock Exchange (NSE), interest accruing on funds received from subscribers to public issues, financial penalties for non-compliance with CMA rules and interest earned from investments.
Mr Cheserem said the settlements began in September 2009 and that 90 per cent of the 27,000 investors, who lodged genuine claims, had been paid.
That position is in line with the CMA report, which shows that the fund was yet to pay Sh11.4 million relating to claims by investors of Nyaga Stockbrokers.
Discount Securities, Nyaga Stockbrokers and Francis Thuo and Partners collapsed over a period of three years with more than Sh2 billion mostly belonging to retail investors.
The capital markets regulator also said in the report that it had developed an early warning system to protect investors from similar loses arising from the collapse of stockbrokers.
"We have developed a risk-based supervision process to proactively identify any challenges experienced by a licensee so that mitigation measures are put in place on time," says Stella Kilonzo, the CMA chief executive.
The report also shows that the regular has intensified its supervision of market intermediaries raising the number of inspections to 157 in 2010 from 149 the previous year.
The increase in market surveillance led to the placement of Ngenye Kariuki and Company, a stockbroker, under statutory management because of "failure to meet client obligations, non-compliance with regulatory requirements, and liquidity problems."
Ngenye Kariuki was not granted an operating licence for the 2011 fiscal year and its directors have been looking for additional capital injection to revive its operations.
Besides the huge payments to Nyaga investors, the ICF balance also suffered an income squeeze with the slowdown in the number of public issues. The fund's income from this segment of the business dropped to Sh12.8 million in 2010 from Sh157 million in 2009. Going by the maximum compensation level of Sh50,000, CMA must find Sh291 million to settle investor claims arising from the collapse of Discount Securities.
Mr Johnstone Oltetia, the statutory manager at Discount Securities, told the High Court in February that the investors would be refunded beginning this month, a move that may further reduce the fund's balance, especially at this time when the market has seen very few public issues; penalties have become scarce and activity remains subdued.
Analysts however said that though the settlements may boost investor confidence in the short term, it should only be used as a last resort.
The Centre for Corporate Governance chairman Job Kihumba, who is also Standard Investment Bank's executive director, said increased surveillance by the CMA would be the most effective method of building investor confidence.
"If you look at the banks, the compensation is set at Sh100,000. If a bank goes under and individuals have a lot more in the banking system, investor confidence cannot be measured in terms of any money paid on these terms," he said.
Mr Kihumba warned that although the settlement amounts look small, increasing it would most likely require that investors pay more to the fund, raising the cost of investing in the stock market that can only erode interest.
"Paying out compensation does increase investor confidence but increasing amounts paid out may discourage small investors," said Mr Paul Orem, the executive director at Dyer and Blair Investment Bank.
"The CMA needs to do is increase market surveillance and encourage better governance so that no other brokers goes the way of Nyaga Stockbrokers."
Over the past one year the market regulator has introduced new capital requirements that require investment banks to hold a minimum of Sh250 million and Sh50 million for stockbrokers.
The CMA has also introduced a back office system for brokers in partnership with the market intermediaries and the NSE, besides risk based supervision.
The market regulator has also been pushing for demutualisation of the NSE and has proposed changes to the Capital Markets Act to gain more supervisory powers.
dmugwe@ke.nationmedia.com
http://www.businessdailyafrica.com/-/539552/1180342/-/view/printVersion/-/xvxwk4z/-/index.html
