This archive report was first published on 28 June 2020.
By James Anyanzwa
The Nairobi Securities Exchange (NSE) is facing a crisis of confidence as stock prices continue to decline, prompting several brokerage firms to sell off their stake in the bourse.
According to the Capital Markets Authority (CMA), foreign investors now control 52.62% of the exchange, while local individual and institutional investors hold 12.39% and 34.9% of the shares respectively.
Of the shares held by local institutional investors, 21.27% belong to the remaining nine stockbrokerage firms, the National Treasury (3.37%), and CMA Investor Compensation Fund (3.37%).
Eight out of 17 brokerage firms that controlled close to 56% of the exchange after the initial public offering in July 2014 have sold off their shareholding, while others have reduced their stakes.
Stockbrokers face a depressed market, prompting some to diversify their business away from the equity market, while others have entered into agreements to merge their businesses.
The NSE's net profit dropped to Ksh80 million ($800,000) in 2019 from Ksh320 million ($3.2 million) in 2014, while shareholder dividends declined to Ksh0.08 ($0.0008) per share compared with Ksh2 ($0.02) per share in 2013.
The exchange's stock price fell to as low as Ksh7.54 ($0.075) per share by June 23, compared with the IPO price of Ksh9.50 ($0.095), translating to losses of Ksh2 ($0.02) per share for investors who bought into the offer in July 2014.
