Day Trading At The Nairobi Securities Exchange

The Nairobi Securities Exchange is one of the fastest developing bourses on the African continent attracting foreign investors looking to tap into emerging economies. The last decade saw several listings as well as roll-out of new products such as derivatives and the commissioning of a new trading system. In 2021, the bourse received authorization for launching day-trading. Simply put, Day-trading is the phenomenon whereby an investor/trader buys and sells their shares within the same day. Before, one had to wait for three working days for settlement of any trade. Day-trading is therefore poised to boost trading activity as well as attracting the youth into stock trading.

Despite the funfair on its launch and the 5% discount offered on the second leg of trading, day-trading transactions only accounted for 3.4% of the trades through January. In a market that trades about Kes.22bn worth of shares monthly, day-trading only saw Kes.784 million worth of shares traded. This investor apathy could be attributed to the following:

High transaction costs: When trading on the NSE, there are several fees levied by the broker, the regulators as well as the exchange. This translates to about 2% of the value transacted. With the NSE only offering a 5% discount on a day-trading transaction, the fees are seen to erode any little gains realized. To put this into perspective, the price of a stock has to gain by more than 5% within the day to incentive a trader to sell it within the day. This is a rare occurrence bearing in mind that only a handful of blue-chip stocks change hands daily thus a 5% gain hardly attainable.

Inactivity on some counters: in some of the listed companies, major shareholders control as much as 70% of the share leaving only 30% available to the public. Of the free float say half of it is held by institutional investors (funds) leaving a very small portion of the shares available to the public. As such, counters like WTK, Kapchorua, Kakuzi and Limuru Tea can go for days without their shares changing hands. The floor is therefore left with very few market movers such as Safaricom, Equity and KCB.

To ensure that day-trading takes off, the NSE has to lower the transaction costs by say 50% as it is in developed markets. Also, the bourse ought to ensure adequate free float as well as attracting new listings. This will see investors diversify their holdings and take up day trading which will boost the bourse’s revenues.

The iGrand End of Year Report: It’s Been Real 2020

Greetings to all of you our esteemed readers and customers. When the year began, we set out to go and conquer the world. For us, our sunrise came in March when plans to escalate iGrand from an idea to a brand that develops and distributes business plans and reviews were born. In July, we published our first ever iGrand Business Review magazine. Since then, we have remained consistent in issuing monthly reviews that are precise and relevant to the business leader. We have chosen to target business leaders only. Business leaders to us are people who are involved in key decision making in an enterprise however small or big. Each magazine has a section for book reviews just to keep you posted of the books we think you should be reading for effective business leadership. We also review the best webinars that perhaps you missed. We are convinced that through such webinar reviews, you’ll be able to catch up with likeminded people without having to sit in a boardroom or attend a seminar. In September this year, iGrand Business Plans was officially registered as a professional service provider in business plan development. We have continued to make progress amidst covid-19 because we are determined to get involved in solving entrepreneurial challenges in Kenya and beyond. We first build relationships with our customers before we can talk transactions. We are coming even closer, we have just finished the technical work in setting up iGrand Business Radio, a podcast channel on anchor FM, Spotify, google podcasts and other distribution channels. We have also finished putting together iGrand Business TV, a channel hosted on YouTube that exclusively features business content. All these developments are geared towards giving you access to reviews that change how you do business. We are in the final stage of developing the iGrand Business Plans App for android devises to purposely democratize access to business development services among small and medium sized entrepreneurs. The app will be ready for public use within the first quarter of 2021. It will make it easier not only to formalize your business and run it professionally, but also reduce the headache in finding a financial partner. At iGrand, we choose to be business partners with our clients. Our progress is yours and yours is our greatest achievement. This report says much about our humble history and more about where we see you if you choose to work with us. Merry Christmas and happy New Year 2021.

This report was compiled by team iGrand Business Plans, led by Rick Okinda, the Team Leader.