The Nairobi bourse has announced a 16 per cent increase in its pretax profit for the period ended 31 December 2014.
The Nairobi Securities Exchange’s (NSE) profit before tax stood at 442 million Kenyan shillings from 380 million due to an increase in the growth of equity turnover. The bourse’s equity turnover grew to 431 billion Kenyan shillings in 2014 from 311 billion the previous year.
Speaking during an investor press briefing in Nairobi, Geoffrey Odundo of the NSE said that the results were also buoyed by a favourable economic environment.
“This had a direct impact on our operating income specifically our transaction levies which rose by 36 per cent and our annual listing fees which rose by 6 per cent in comparison to 2013,” Odundo said.
The exchange which is the second bourse in Africa after the Johannesburg Stock Exchange to self-list after it reported that its Initial Public Offering (IPO) had been oversubscribed to 663.92 per cent saw its funds raised in the market last year rise to 119 billion Kenyan shillings.
“This is a good indicator that the market is good for capital raising,” said Odundo.
The NSE’s total income rose significantly by 25 per cent to 141 million Kenyan shillings while earnings per share was recorded at 2.13 Kenyan shillings up 4 per cent.
Nonetheless, foreign investor participation declined marginally to 51.12 per cent during the year under review from 51.38 per cent in 2013. Furthermore, Odundo states activity was low in the month of December because of worries by investors due to the introduction of the capital gains tax that was introduced in 2015.
As for the outlook and strategy for the bourse which has an equity market capitalisation cap of 1.9 trillion Kenyan shillings the NSE will introduce new products.
“The exchange is on course to launch the derivatives market. Our initial products will be single stock and index futures before offering currency based contracts and we are also working closely with South Africa to set up a derivatives market,” Odundo said.
“Derivatives can play a critical role in making Kenya a self-sufficient nation.”
To improve liquidity of the market, the NSE is working closely with stakeholders on security lending and borrowing, mobile online trading among others.
“We expect further listings on the Main Investment Market Segment (MIMS) and the Growth Enterprise Market Segment (GEMS). The Fixed Income Market will witness further Corporate and Government Debt issues.”