New products are set to be introduced at the Nairobi Securities Exchange (NSE) to boost the market, whose equity trading has dropped considerably following a bear-run that has hit revenue.
Exchange Traded Funds (ETF) and Global Depository Receipts are among the products the bourse is targeting to start this year, according to chief executive Geoffrey Odundo.
“In 2017, the exchange shall continue to aggressively pursue new listing opportunities. Whilst continuing to encourage trade in equities and fixed income instruments, the bourse has its sights set on diversification of revenue through new product offerings such as Exchange Traded Funds, Derivatives Contracts and Global Depository Receipts (GDR),” said Odundo Tuesday.
ETF are a type of investment fund traded at the stock exchange while derivatives contract is an agreement whose value is derived from the values of interest rates and foreign exchange rates, among others.
On the other hand, GDR is a certificate issued by a bank, which purchases shares of foreign companies and deposits it on the account.
The Growth Enterprise Market (GEM) and Alternative Investment Market segments are among those that recorded new listing last year.
Launched in 2013, GEMs segment has offered small firms a chance to grow through flexible listing requirements such as reduced number of shares issued (100,000) and a minimum paid up capital of 99,000 U.S. dollars.
Odundo noted that the capital markets sector remained resilient last year despite a challenging operating environment both locally and internationally.
“Though equities turnover decreased as at end of December 2016, bond turnover increased significantly and this segment continues to register good performance,” he said.
The NSE, which is also listed at the bourse, issued a profit warning in November last year for its full-year earnings, citing reduced equity trading volumes.
Analysts note the NSE continues to witness volatility on large cap stocks led by Safaricom, East Africa Breweries Ltd, Cooperative Bank and Kengen.
They expect more capital flight from the market this year which may leave valuations further lower than they closed 2016.