The head of Kenya’s stock exchange expects easier access to dollars to boost foreign interest in the nation and help the world’s worst-performing stock market recover in the second half of the year.
(Bloomberg) — The head of Kenya’s stock exchange expects easier access to dollars to boost foreign interest in the nation and help the world’s worst-performing stock market recover in the second half of the year.
“We came off a very difficult past especially on access to dollars at some point,” Nairobi Securities Exchange Chief Executive Officer Geoffrey Odundo said in an interview with Bloomberg. “Investors were having a challenge accessing dollars to repatriate back, and that was causing a bit of a stressful moment.”
The backlog of orders by foreign investors seeking to repatriate funds has now been cleared, he said, and “my outlook is fairly optimistic that things will turn around.”
The market’s all-share index was valued at 1.53 trillion shillings ($17.9 billion) as of Friday, down 15% so far this year, the steepest decline among almost 100 global indexes tracked by Bloomberg. Almost 80% of the bourse’s market capitalization is in 10 companies, and a recovery in those should bring overall market cap back up to 2 trillion shillings, Odundo said.
READ MORE: Kenya’s Once-Booming Stock Market Buckles Under Dollar Shortages
Odundo also said the bourse has held discussions with potential issuers of real estate investment trusts, or REITs, including pension funds, insurers, and savings and credit unions.
“That’s going to be one of our best performing new asset classes going forward,” he said. “We are hearing more interest coming in, and again, we cannot say which ones are coming through but it is a growing market.”
The NSE currently has four listed real estate investments trusts: two traded on the main market segment and the others on the Unquoted Securities Platform.
Odundo said he was encouraged by data in the past week that showed offshore investors have been net buyers, attributing that to bets that macroeconomic factors in Eastern Africa’s second largest economy are set to improve.
“Our market enjoys almost 60% foreign flow,” he said. “They haven’t been very active because of the rising interest rates in Europe, the US so that’s impacted on especially frontier investors who would otherwise be looking for good yields in this market.”
The exchange has also held talks with Credit Bank Ltd. and Bio Food Products Ltd. on plans by the two companies to list their shares. The lender has hired a consultant to advise it on the planned listing and is finalizing some internal transactions, Odundo said.
“We hope that they will come through before the end of the third quarter,” he said. “Bio Food have also been through some transitions internally so they are also in the process of finalizing some internal things, so that they can come to the market.”
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