East Africa Capital Markets need a single depository to improve liquidity
Meanwhile, East Africa Investment Professionals have been challenged to explore emerging instruments to spur financial markets recovery in the post-Covid- 19 era
NAIROBI - Many emerging markets suffer from significantly low levels of trading venue liquidity, effectively placing a constraint on economic and market development. Keith Kalyegira, C.E.O Capital Markets Authority Uganda, says a single depository for the region would really improve liquidity, especially for cross listings. He made the remarks while speaking during the opening of the Chartered Financial Analysts Society East Africa (CFA Society EA) 4th Annual Investment Conference in Nairobi.
Higher liquidity creates a virtuous cycle with positive spillover effects for the underlying economy.
The importance of market liquidity and its relationship to financial market development can be understood by examining the impact on various market actors:
- For investors, more liquid markets are associated with lower costs of trading, an ability to move more easily in and out of assets, lower price volatility, and improved price formation.
- Issuers are attracted to more liquid markets, as they reduce the cost of raising capital and produce more accurate share price valuations.
- Stock exchanges value the increased attractiveness to issuers and investors, as this translates into greater use of the market, greater confidence, greater ability to attract new stakeholders, and greater ability to do business, which drives revenues both directly (through trading fees) and indirectly (through extending their product offering, for example).
- Economies as a whole benefit, with companies able to access capital at a reasonable cost, subsequently increasing investment in their business and driving increased employment and their overall contribution to the economy.
Meanwhile, East Africa Investment Professionals have been challenged to explore emerging instruments to spur financial markets recovery in the post-Covid- 19 era.
Speaking during the opening of the Chartered Financial Analysts Society East Africa (CFA Society EA) 4th Annual Investment Conference in Nairobi, Trade and Investments Cabinet Secretary Moses Kuria said local and regional capital markets need to expand and seek new ways of financing businesses and the government.
Kuria noted that president Ruto’s administration will be seeking to strengthen protection for investors, modernize regulatory frameworks, and introduce new financial instruments to spur investments and economic growth.
The CS told the CFA Society members and investors that the Kenyan government has rolled out a raft of measures aimed at re-invigorating the capital markets aimed at raising capital and attracting new investment opportunities.
“Towards actualizing these initiatives, the Kenyan government has established a state department for investment which will drive the entire process. The Ministry of Trade and Investments is also in the process of positioning Nairobi as a global financial services centre in Kenya similar financial centres based in London, Dubai, Shanghai and Johannesburg among others," Kuria added.
Francis Nasyomba, CFA Society East Africa President told the conference delegates that investor inflows are expected to rebound after the downturn experienced in the last three years due to the COVID-19 pandemic outbreak.
He said the Investment Conference was aimed at bringing together investors, regulators and public policy decision-makers to learn and share ideas and experiences on how to deepen regional capital markets to spur economic growth.
“This conference is a great opportunity to for investment professionals to discuss emerging issues such as technology, new global trends and their impact on the regional investment markets,” Nasyomba added.
Over 300 international, regional and local attended the one-day Investment Conference.
Lead sponsors at the conference included Refinitiv, Kigali International Financial Center, Sanlam, EAVCA, BDO Holdings Africa and Synesis Capital Limited.
Among the key presenters at the conference included Fred Swaniker, Founder and CEO, of African Leadership Group Patricia Kiwanuka, CFA, OGW, Investment Manager, Counselling Psychologist and Director of Revenue Stream.