Tuesday, September 01, 2009

Salute to Kenyan Stockbrokers Part I

Salute to Kenyan stockbrokers, investment banks and fund managers, and the capital markets authority (CMA) for their moves to improve transparency at the NSE of late.

When the new rules were announced early this year, few doubted that licensees (especially stockbrokers would comply, but the early signs are good.
One of the milestones was for the publication of financial statements by Collective Investment Schemes, Stockbrokers, Dealers, Fund Managers and Investment Banks twice a year; and this they did, many baring their losses, some with dubious figures or cosmetic summations, and some omitted profit & loss, but which their auditors will hopefully be able to reconcile at the end of the year.

The compliance was notable in that the intermediaries were able to publish their June 2009 summarized financial accounts,

Investment Banks: 100% (missing was Juanco (now Equity IB?), while FCB Capital was only licensed in June 09)
- Stock Brokers: 100% (missing was Discount (collapsed), Bob matthew (is now KingdomSecurities), while African Alliance is now an investment bank)
- Authorized Security Depositories: 100% (all 12 are commercial banks)
- Collective Investment Schemes: 100% (all are fund managers)
- Fund Managers: 94% (missing was Aueros, while African Alliance reported as an investment bank, and amazingly CIC who were licensed in June 09 already complied)
- Investment advisories 10% they are not required by the law to report, but Dry Associates and Tsavo Securities did

The results were harsh (more on that later) as the downturn at the Nairobi Stock Exchange has had a shocking effect on these companies. But they have recognized that and started taking measure in the form of mergers, re-capitalization staff reductions. When the NSE improves, they will reap the dividends. The signs are good for frontier markets and African markets, but the Kenyan political scene is still a cause for concern for the recover of the NSE and its brokers.


Anonymous said...

This analysis suggest a dream world scenario, not just for the NSE but for most African stock exchanges (excluding south africa and botswana - the only 2 african countries that have embraced the rule of law and thus, the only 2 african countries that will have long lasting and viable stock exchanges.

Your predictions here are quite stunning in light of the realities on the ground

kenyantykoon said...

these developments really make an investors heart warm up particularly those who have lot cash because of inefficiencies in the past. soon we will be rivaling the SEC and NYSE in America. great post. au courant

Gay Nairobi Man said...

It is great that we can now see compliance.

The results made interesting reading though and the question that begs is.."if these guys cannot run their businesses profitably, how do expect them to advise us?" This especially goes to the Investment Bankers.

It was comical the length some of them went with disclosures to try and sort of explain their dismal returns.

Most of the balance sheets also disclose inefficiency with huge payable and receivables.

Anonymous said...

can someone please do a summary for the brokers results. I am in the dispora and did not see my brokers--francis drummond--mentioned in the online media.

Anonymous said...

Earnings summary--courtesy of Faida Investment Bank

MainaT said...

Anon-also see http://1.bp.blogspot.com/_mHRbYvBwZn8/SpvTvRW-5nI/AAAAAAAAAX4/XfTArhqyI1c/s1600-h/brokers.jpg


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