This archive report was first published on 6 October 2019.
On October 6, 2019, the Nairobi Securities Exchange (NSE) reported a slight increase in bond turnover for September, reaching Sh46.1 billion, up from Sh41.2 billion in August.
Despite this uptick, trading levels remained lower than those seen earlier in the year, with commercial banks participating less in the market due to uncertainty surrounding the interest rate cap law.
According to Mercyline Gatebi-Kyalo, head of research at Kingdom Securities, investors had been hesitant to participate in the market due to the uncertainty surrounding the interest rate cap law.
“Investors have been uneasy because there was uncertainty as to which direction the interest rate cap law would go. So commercial banks were not participating as much as previously and that is why trading is still not as high,” said Ms Gatebi-Kyalo.
However, with the recent resolution of the rate cap matter, trading is expected to normalize going forward, with Ms Gatebi-Kyalo predicting that banks will want to lend more to the private sector and participate less in the secondary market trading of government securities.
“Now that we are not expecting a repeal of the law we expect people to come back to normal trading. But we also expect banks will want to lend more to the private sector and participate less in the secondary market trading of government securities,” said Ms Gatebi-Kyalo.
