Kenya is experiencing a wave of renewed appetite by retail traders at the Nairobi Securities Exchange (NSE) after investor accounts jumped 103 per cent.
The number of accounts at the Central Depository and Settlement Corporation Limited (CDSC) surged to 12,673 from 6,214 according to the Capital Markets Authority (CMA) 2021 third quarter soundness report.
With stocks prices at all-time low as a result of foreign investor sales and low corporate performance Kenyans can finally buy into owning top sixty companies across agriculture, manufacturing banking and telecommunications.
Entry of new retail products such as EFG Hermes One that lets ordinary Kenyans buy stocks via mobile phones and Safaricom partnership with the NSE to allow its customers buy stocks with loyalty token, Bonga Points, have also boosted number of investors.
“There were 12,673 CDS accounts activated in quarter three, a 103.94 per cent increase compared to 6,214 in quarter two of 2021 showing CDSC aggressive account reactivation campaign bearing fruit,” CMA said during the release of the 2021 quarter three market soundness report.
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In July, EFG Hermes One launched an online equity-trading platform offering a quick and efficient onboarding process, allowing users to download the application and sign up to create an account by entering their personal information.
Safaricom also announced in August 9 it had partnered with the Nairobi bourse operator in a deal that will see its customers get Kes1 for every five loyalty points and use it to invest in stocks.
The Safaricom deal with the NSE allowing loyalty awards to be used to purchase stocks has the potential of unlocking billions into the stocks market.
At the moment, Bonga Points have an outstanding value of Kes4.2 billion which has however remained largely unused to buy shares listed on the NSE despite expectations it would unlock trading by local investors at the bourse.
Bonga Points purchase of shares has been off to a slow start with Safaricom customers buying Kes600,000 worth of stocks in the first seven weeks.
The new developments come at a time when the NSE has just introduced day trading for retail investors, allowing them to buy and sell stocks as well as settle trades in a single day as its seeks to grow the value of our equity markets to 50 per cent of Kenya’s GDP.
At Kes2.7 trillion, the current market capitalization is just 25.84 per cent of Kenya’s GDP.
“Increased active accounts portends higher retail investor participation as more activations and new accounts anticipated with introduction of day trading. This is expected to translate into higher product update (demand side) and market liquidity,” CMA said during the release of the 2021 quarter three market soundness report.
Despite the huge number of investors, trading is still low with equity turnover for the third quarter 2021 at Kes31.36 billion, compared to Kes37.99 billion registered in the three months to June, this year.
The 17.45 per cent decrease confirms decreased trading activity at the bourse during the quarter just as the volume of shares traded contracted by 13.93 per cent to 946.48 million in quarter three 2021 compared to 1,099.65 million in the previous three-month period.