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From a great past to a greater future 28 TH JULY, 2012 Capital Markets: Primed to Facilitate Investment By Kamunyu Njoroge: Manager, Investor Education & Public Awareness Capital Markets Authority
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Capital Markets: Primed to Facilitate Investment

Jan 09, 2016

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Capital Markets: Primed to Facilitate Investment. By Kamunyu Njoroge: Manager, Investor Education & Public Awareness Capital Markets Authority. PRESENTATION OUTLINE. MARKETS POSITIONED TO FACILITATE FINANCING TRIED AND TESTED MARKET CAPACITY - PowerPoint PPT Presentation
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Page 1: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Capital Markets:Primed to Facilitate

InvestmentBy Kamunyu Njoroge:

Manager, Investor Education & Public Awareness

Capital Markets Authority

Page 2: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

PRESENTATION OUTLINE

PRESENTATION OUTLINE

• MARKETS POSITIONED TO FACILITATE FINANCING

• TRIED AND TESTED MARKET CAPACITY

• ROLE OF CAPITAL MARKETS ENSHRINED WITHIN THE VISION

• LEADING EDGE REFORMS TO SUPPORT THE VISION

• PRODUCTS RESPONSIVE TO NEEDS

• OUR DIASPORA INITIATIVES

• GATEWAY TO THE REGION

Page 3: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

INSTITUTION PROFILE

• Set up in 1989 through Act of Parliament Cap 485A Laws of Kenya

• Regulates the development of orderly, fair and efficient capital markets in Kenya

• Licenses and oversees over 100 market intermediaries and approved institutions

Page 4: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Page 5: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Largest Equities Exchange in East and Central Africa

-Nairobi Securities Exchange has 59 out of the 92 listed companies in the East African region

-Nairobi Securities Exchange is the fourth largest market (after South Africa, Egypt and Nigeria) in terms of market capitalization at USD 12.5 billion (as at June 2012)

-The Settlement Cycle is at T+3 matching an international standard yet to be implemented by even South Africa

-Despite 2011 being a bearish year for securities markets globally NSE has rebounded in 2012 and being the 3rd best performing market Globally, after Venezuela and Egypt (index annualized returns, year to date 16%)

-Growth and Enterprise Market Segment introduced for SME’s providing Private Equity exit and broadening access to capital

EQUITIES MARKETS SUPPORTING GROWTH

Page 6: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Largest and most developed Bonds market in East and Central African region

-Nairobi Securities Exchange has listed 68 Treasury Bonds and 19 corporate bonds.

-Nairobi Securities Exchange was the second largest African market (after South Africa) in terms bond turnover as a % of GDP in 2011 at 19%

-Fully automated trading and clearing with T+3 Settlement Cycle

-The yield curve extends up to a 30 year bond

THRIVING BOND MARKETS

Page 7: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Over the last 15 years, the capital market has raised over Kshs 1.3 trillion (BP9.9 billion) through bonds and equities;

Kshs 514 billion (BP3.9 billion )has been raised in the last 3 years notwithstanding the effects of global financial crisis in 2008/09;

The value of listed securities (debt and equity) currently at Kshs 1.7 trillion (BP13 billion), nearly 50% of Kenya’s GDP

TRACK RECORD OF PERFORMANCE

Page 8: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Equities: Safaricom IPO (Telcoms) Kshs. 250 billion (2008)

Debt: KENGEN Bond (Power Generation) Kshs. 25 Billion (2009)

Issuances despite impact of recent international market instability:

Over Kshs. 32 Billion raised in the capital markets from IPOs, Rights Issues & Public Offers (2010 – 2012)

ESTABLISHED MARKET DEPTH

Page 9: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

CONDUCIVE POLICY ENVIRONMENT Interest income from infrastructure & social

services bonds with at least a maturity of 3 years is tax exempt;

Stamp duty is exempt for purposes of transferring assets for issuing Asset Backed Securities (ABS)

Interest earned by Asset Backed Securities is tax exempt;

Income on investment in a venture company earned within the first ten years tax exempt;

Investment income of a pooled fund tax exempt;

No capital gains tax on securities

Page 10: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Under Vision 2030, the capital market is expected to play a critical role in achieving the growth targets through:

Mobilizing savings and investments in productive enterprise;

Facilitating long term infrastructure financing;

Diversification of financing for SMEs; Backbone of the transformation of Nairobi into

an International Financial Centre (IFC); Linchpin of regional integration initiatives

towards a regional market;

THE CHALLENGE TO THE CAPITAL MARKETS UNDER VISION 2030

Page 11: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Implementation of framework of Demutualization of the Nairobi Securities Exchange

- Demutualization regulations expected to be gazetted in first quarter of 2012

Framework for product development through

effective oversight of empowered SRO’s- Driver for Derivatives market development- Basis for Bond Market reforms

Modernisation of market infrastructure and practices–

-Automated Trading and Depository System since 2006 (equity) and 2009 (Debt).

- State of art Surveillance System launched in June 2012

REFORM AND DEVELOPMENT AGENDA TO ENSURE REFORM AND DEVELOPMENT AGENDA TO ENSURE ATTAINMENT OF THE VISIONATTAINMENT OF THE VISION

Page 12: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Introduction of Legal and Regulatory Framework in line with IOSCO Principles and international best practice

Ongoing implementation of Risk Based Supervision by the Capital Markets Authority:

- Profiling and assessment of licensees already being implemented

- Financial Resources Regulations under public exposure (June/July 2012)

- Full implementation FY 2012/2013

CMA is a Full Signatory of the IOSCO Multilateral MOU to play role in combating cross border market misconduct

REFORM TO SUPPORT THE VISION

Page 13: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Introduction of Real Estate Investment Trust vehicles to leverage booming property industry- Framework was on public exposure June –

July 2012

Introducing Traditional REIT products for income generating rental properties

Introducing unique Development REIT products to fund construction and development

Tax neutrality and incentives under consideration by government

DEEPENING PRODUCT RANGE

Page 14: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Introduction of Listing Platform for SME and Venture Companies Growth and Enterprise Market Segment

(GEMS)

Modeled on TMX Venture Exchange, the JSE ALTEX and the London Stock Exchange AIMS market

Provides a prime avenue for exit for growing Private Equity and Venture Capital investment industry

Opportunity for entrepreneurs to diversify ownership and realize investment

DEEPENING PRODUCT RANGE

Page 15: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Target to become the continents hub for Islamic Capital Markets Products

Engaging with Banking and Insurance supervisors to offer full scope of Islamic financial products

Prime instruments to invest in the real economy:Infrastructure financingReal estate financing

DEEPENING PRODUCT RANGE

Page 16: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

UNEXPLOITED OPPORTUNITIES

Asset Backed Securities

Mortgage Backed Securities

Futures and Derivatives

Islamic products ( Islamic Mutual Funds, Sukuks)

Municipal bonds

Futures and Options

Swaps

Currency Dealing

Arbitrage

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Page 17: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

CAPITAL MARKETS SERVICES Transaction Advisory services;

Stockbrokerage and Investment Banking;

Futures trading;

Asset Management;

Investment Advisory services;

Nominated Advisors (for Growth Enterprises);

Credit rating;

Underwriting;

Guarantees;

Capacity building (Certification Product for market

intermediaries);17

Page 18: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Participation in Diaspora forums and various investment conferences across the globe

Partnership with Ministry of Foreign Affairs Diaspora Division, to provide informational brochures on capital markets in Kenya throughout its embassy network,

Partnership Ministry of Foreign Affairs Diaspora Division to link the Authority’s website to the Ministry’s and Embassy’s website

Services and products targeted for the Diaspora; includes Diaspora Unit Trust and Online Trading

Working with Central Bank to make it easier for remittance and Diaspora investments in Kenya

DIASPORA INITIATIVES

Page 19: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

Gateway to a Population of 140 million people within the East African region and 400 million within East central and Southern Africa COMESA region’

Regional hub for a combined GDP of USD 70 Billion for the East African region

Abundant natural resources/wildlife

Point of access to the resource rich newly independent South Sudan and DR Congo

Key member of the EAC custom union and a common market

Participation in Diaspora forums and various investment conferences across the globe

KENYA: A KEY DESTINATION FOR CAPITAL

Page 20: Capital Markets: Primed to Facilitate Investment

From a great past to a greater future

28TH JULY, 2012

For Further Information, Please Contact:CAPITAL MARKETS AUHORITY

Upper Hill, Longonot Road, Off Kilimanjaro Avenue

Embankment Plaza, P.O Box 74800 – 00200, Nairobi Kenya

Tel: +254 20 2264900/ 2710789/ 2710775 Fax: +254 20 2228254

 Website: www.cma.or.ke, Email:

[email protected]

Page 21: Capital Markets: Primed to Facilitate Investment

THANK YOU