Nairobi Securities Exchange PLC · NSEKE:NSE
Nairobi Securities Exchange — The 3rd Listed Companies Forum (March 2010)
53 slides from Nairobi Securities Exchange's conference presentation, Mar 31, 2010
Slide 1: The 3rd Listed Companies Forum
THE 3RD LISTED COMPANIES FORUM MR. PETER MWANGI CHIEF EXECUTIVE 31ST March 2010 1 OFFICE OF THE CHIEF EXECUTIVE
Slide 2: Table of Contents
TABLE OF CONTENTS 1 ECONOMIC INDICATORS 1. 2 2010 MARKET PERFORMANCE 2. 3 COMPARATIVE ANALYSIS 3. 4 PROGRESS ON INITIATIVES 4. 2 OFFICE OF THE CHIEF EXECUTIVE
Slide 3: Economic Indicators
ECONOMIC INDICATORS 3 OFFICE OF THE CHIEF EXECUTIVE
Slide 4: Economic Indicators: GDP Growth
ECONOMIC INDICATORS Parameter EST. AVG. PROJ. GDP. GDP GROWTH 2010 GROWTH 2009 K Kenya 1 8% 2 5% 4.0% 1.8%-2.5% 4 0% Sub Saharan Africa (SSA) 2% 6% OECD countries (-2.2%) 3% Kenya K n GDP •2007: 7.1%; 2008: 1.7% 2009 GDP contribution p per sector;; Agriculture ~22.5% Industry ~16.5% Services ~61% 4
Slide 5: Economic Indicators: Consumer Price Index (CPI)
ECONOMIC INDICATORS: CONSUMER PRICE INDEX (CPI) CPI weighting -Food & Non alcoholic beverages – 36.04%; Housing, water, electricity, gas and other fuels – 18.3%; Combined – 54.34% Month Geometric Overall CPI February-2009 100.0 March-2009 101.0 April-2009 101 8 101.8 May-2009 101.8 June-2009 102.1 J
Slide 6: Inflation
INFLATION Headline Geometric (overall) 20.0% 18.0% 16.0% 14.0% 12.0% 10 0% 10.0% 8.0% 6.0% 4.0% 2.0% 0 0% 0.0% Headline Geometric 6 OFFICE OF THE CHIEF EXECUTIVE
Slide 7: Economic Indicators: Interest Rates
ECONOMIC INDICATORS Parameter Rate Trend analysis 91 T-bill T bill rate (29 March 2010) 5 74% 5.74% 182 T-bill rate (29 March 2010) 6.298% Commercial bank lending rate 14.98% Overdraft rate 14.25% Average weighted coupon rate payable on 11.44% bonds SOURCE: CBK & NSE 7 OFFICE OF THE CHIEF EXECUTIVE
Slide 8: Interest Rates
INTEREST RATES Interest rates are expected to continue declining in the short term period. 16 15 14 13 12 11 10 Rates in % 9 8 7 6 5 4 3 2 1 0 Commercial Bank Rates Overdraft Rates T-Bill Average Interbank Savings rate 8 SOURCE: Central Bank of Kenya OFFICE OF THE CHIEF EXECUTIVE
Slide 9: 2010 Market Performance Overview
2010 MARKET PERFORMANCE OVERVIEW 9 OFFICE OF THE CHIEF EXECUTIVE
Slide 10: Equity Market Performance 2008/2009 Comparison
EQUITY MARKET PERFORMANCE 2008/2009 COMPARISON Market Indicator 2009 2008 % Change NSE 20 Share Index 3,247.44 3,521.18 ‐7.77 NSE All Share Sh Index I d (NASI) 71 64 71.64 73 37 73.37 ‐2.36 Market Capitalization( Kshs. Bn) 831.83 853.67 ‐2.56 No. of Shares Traded (Mn) 3,160 5,856 ‐46.04 q y Turnover
Slide 11: Equity Market Performance Year to Date
EQUITY MARKET PERFORMANCE YEAR TO DATE (YTD) INDEX 4th JANUARY 30TH MARCH % CHANGE 2010 2010 NSE 20 3,261.17 4,057 24.40% Sh Share Index NSE All 71.89 84.36 17.35% Share Index (NASI) 11 OFFICE OF THE CHIEF EXECUTIVE
Slide 12: Index Performance YTD: NSE Share Index
INDEX PERFORMANCE YTD NSE 20 SHARE INDEX 4,500.00 4,000.00 3,500.00 3,000.00 2,500.00 2,000.00 Jan.09 May.09 Jun.09 Jan.10 Feb.09 Mar.09 Apr.09 Aug.09 Sep.09 Feb.10 Dec.08 Oct.09 Nov.09 Dec.09 Jul.09 Mar.10 M 25 M M A 12 OFFICE OF THE CHIEF EXECUTIVE
Slide 13: Index Performance YTD: NSE All Share Index
INDEX PERFORMANCE YTD NSE ALL SHARE INDEX 90.00 85.00 80.00 75.00 70.00 65 00 65.00 60.00 55.00 50.00 45 00 45.00 40.00 Jan.09 Jun.09 Jan.10 Feb.09 Mar.09 Apr.09 May.09 Aug.09 Sep.09 Feb.10 Dec.08 Oct.09 Nov.09 Dec.09 Jul.09 Mar.10 M 25 M M A 13 OFFICE OF THE CHIEF EXECUTIVE
Slide 14: Equity Market Performance YTD: Market Capitalisation
EQUITY MARKET PERFORMANCE YTD DATE Market %YTD change Capitalisation (Kshs. Billion) 4th January y 837.127 17.35% 2010 30th March M h 982 33 982.33 2010 14 OFFICE OF THE CHIEF EXECUTIVE
Slide 15: Foreign Investor Trading in Equity YTD
% FFT/TM 20 30 40 50 60 70 80 90 44% De ec.08 Jaan.09 Fe eb.09 Maar.09 Ap pr.09 Maay.09 Q Ju un.09 Ju ul.09 Au ug.09 EQUITY Se ep.09 Occt.09 YTD No ov.09 De ec.09 Jaan.10 Fe eb.10 FOREIGN INVESTOR TRADING IN Indicative expected foreign turnover for March is 23 Maar.10 44 15
Slide 16: Foreign Investor Trading in Equities YTD
FOREIGN INVESTOR TRADING IN Q EQUITIES YTD 16 OFFICE OF THE CHIEF EXECUTIVE
Slide 17: Foreign Investor Equity Net Inflows
FOREIGN INVESTOR EQUITY NET INFLOWS; Q4/09 YTD PURCHASES SALES Net In‐flow (Kshs.) Total (Foreign) Total (Market ) Total (Local) FT/TM TL/TM SEP 09 1,662,785,136.45 725,325,466.10 937,459,670.35 2,388,110,602.55 3,547,591,207.05 1,159,480,604.50 67.32% 32.68% Oct. 3,134,789,562.05 709,846,774.60 2,4
Slide 18: Bond Market Performance YTD
BOND MARKET PERFORMANCE YTD Bond Turnover in Kshs. Kshs Billion 18 OFFICE OF THE CHIEF EXECUTIVE
Slide 19: Bond Market Performance YTD: Monthly Turnover
BOND MARKET PERFORMANCE YTD MONTH TURNOVER (Kshs. Billion) December 2009 15.94 January 2010 26.75 February 2010 41.64 March 2010 46 802 46.802 * As at March 30th 19 OFFICE OF THE CHIEF EXECUTIVE
Slide 20: Analysis of February Bond Performance
BOND MARKET PERFORMANCE YTD ANALYSIS OF FEBRUARY BOND PERFORMANCE Total Turnover-Government B d Bonds 41 638 700 000 41,638,700,000 Total Turnover-Corporate Bonds 260 450 000 260,450,000 Total Market Bond Turnover 41,899,150,000 , , , Total Market number of transactions 691 20 OFFICE OF THE CHIEF EX
Slide 21: Government Domestic Debt
BOND MARKET PERFORMANCE YTD Government gross domestic debt increased from Kshs 518.3 Kshs. 518 3 billion in June 2009 to Kshs Kshs. 619 619.5 5 billion as at March 19, 2010. TYPE OF GOVT. % Of Domestic Kshs. Billion SECURITY debt Treasury Bills 27.6% 160.7 Treasury bonds 72,.3% 421.1 Total Govt. Dom
Slide 22: Holding of Government Bonds by Organisation
BOND MARKET PERFORMANCE YTD ORGANISATION % HOLDING OF GOVT. BONDS C Commercial i lBBanks k 57 5% 57.5% Pension schemes 21.8% Insurance companies 10.4% Parastatals 6.3% 22 OFFICE OF THE CHIEF EXECUTIVE
Slide 23: NSE Bond Yield Curve
NSE BOND YIELD CURVE 15.0000 NAIROBI STOCK EXCHANGE YIELD CURVE 26-MARCH-2010 14.0000 13.0000 12.0000 11.0000 YIELD (%) 10.0000 9.0000 8.0000 7.0000 6.0000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 TENOR (years) Disclaimer: The Nairobi Stock Exchange believes that all the information provided abo
Slide 24: Entire Performance YTD: Market Turnover
ENTIRE PERFORMANCE YTD MARKET TURNOVER 45.00 40.00 35.00 Volume Ksshs. Billion 30.00 25.00 20.00 Equities 15.00 Bonds 10.00 5 00 5.00 0.00 Feb.09 Feb.10 Dec.08 Oct.09 Nov.09 Dec.09 Jan.09 Jun.09 Jan.10 Mar.09 Apr.09 May.09 Jul.09 Aug.09 Sep.09 Mar.10 24 OFFICE OF THE CHIEF EXECUTIVE
Slide 25: Market Liquidity to Date
MARKET LIQUIDITY TO DATE 26.03 0.80 0 70 0.70 0.60 0.50 % 0.40 0 40 0.30 0.20 0.10 0.00 eb.09 Oct.09 eb.10 Dec.08 Dec.09 Jaan.09 Mar.09 Apr.09 May.09 un.09 JJul.09 ug.09 ep.09 Jaan.10 Mar.10 Nov.09 Au Fe Fe Ju Se M M O A Market liquidity: Equity turnover as a percentage of market capitalisation 25 O
Slide 26: Comparative Analysis with Other Equity Markets
COMPARATIVE ANALYSIS WITH OTHER EQUITY Q MARKETS 26 OFFICE OF THE CHIEF EXECUTIVE
Slide 27: Comparative Analysis with Other Equity Markets
COMPARATIVE ANALYSIS WITH OTHER EQUITY MARKETS COUNTRY INDEX % GAIN/LOSS YTD Kenya NSE 20 Share 24% Nigeria NIG 30 Index 20.6% E Egypt EGX 30 10 41% 10.41% South Africa JSE/FTSE ALSI 3.2% Ghana GSE All share 5.55% Morocco MASI 9.92% 27 OFFICE OF THE CHIEF EXECUTIVE
Slide 28: Select 1 Year Counter Performance: Share Price
SELECT 1 YEAR COUNTER PERFORMANCE: SHARE PRICE COMPANY % GAIN/LOSS 1 YEAR Athi River Mining 61 54 61.54 Co-operative Bank of 62.60 Kenya Crown Berger 116 Jubilee Holdings 66.49 Kakuzi 287.95 Kenya Airways 208.48 Mumias Sugar 135.23 Safaricom 80.33 28 TPS Serena 71.43 OFFICE OF THE CHIEF EXECUTIVE
Slide 29: Progress on Initiatives
PROGRESS ON INITIATIVES 29 OFFICE OF THE CHIEF EXECUTIVE
Slide 30: Bond Automation
BOND AUTOMATION 30 OFFICE OF THE CHIEF EXECUTIVE
Slide 31: Bond Automation
BOND AUTOMATION Automation provides value as follows:- •Increases liquidity; Reduces operational risk; •Reduces •Efficient dissemination of bond pricing and yield information from a centralized, credible source – the Exchange ATS. ATS The methodology for the compilation of the bond price list and yi
Slide 32: Bond Automation: KenGen Infrastructure Bond
BOND AUTOMATION The Kenya Electricity Generating Company (KENGEN) Public Infrastructure Bond Offer (PIBO) which was issued on November 2 2009, marks a milestone in our market. •The Kshs. 25.0 billion - the largest public debt issue to date; •10 ten year tenor - the longest tenor corporate bond to da
Slide 33: Bond Automation: Results of Automation
BOND AUTOMATION On November 25, 2009, Government of Kenya treasury bonds (T- Bonds) commenced trading via the automated trading system. The CBK continues to perform the functions of the Registrar of National Debt. The settlement Th l cycle l for f both b h corporate and d T - Bonds B d iis T T+3 and
Slide 34: Notable Corporate Bond Issues
NOTABLE CORPORATE BOND ISSUES Bond Issue Face Value Tenor Coupon % Date (Kshs. million (US$ (Year million)) s) Subscription Rate CFC Stanbic 07-07-2009 97.91 7 T.B. 2,402.09 (182)+1.75% 2,500.00 (32.0) 12.50 Oversubscribed by 28% Shelter Afrique 24-08-2009 95.2 3 T.B. (182)+1.5% 904.8 11.00 1,000.00
Slide 35: Bond Automation: Immobilization of Corporate Bonds
BOND AUTOMATION To facilitate electronic trading the Board of the CDSC has approved the immobilization of all existing corporate bonds. It affects the following bonds: bonds:- 1. Shelter Afrique; 2. Faulu Kenya; 3 Athi River Mining; 3. 4. Sasini; 5. Safaricom; 6 East African Development Bank; 6. 7.
Slide 36: Authorised Securities Dealers (ASDs)
AUTHORISED SECURITIES DEALER (ASDs) 36 OFFICE OF THE CHIEF EXECUTIVE
Slide 37: Authorised Securities Dealer (ASD)
AUTHORISED SECURITIES DEALER (ASD) The NSE Board of Directors approved the introduction of ASDs. ASDs are a category of Associate member that is restricted to dealing in debt securities listed on the FISMS. The NSE has invited commercial banks to apply pp y for ASD licences 37 OFFICE OF THE CHIEF EX
Slide 38: Benefits of ASD Membership
AUTHORISED SECURITIES DEALER (ASD) Benefits of ASD membership; 1. Reduced costs of transaction 2. Direct market access to more market participants 3. Enhance transparency p y which is essential for p price integrity 4 Deepen overall market liquidity in secondary 4. market as commercial banks trade f
Slide 39: Responsibilities of ASDs
AUTHORISED SECURITIES DEALERS (ASDs) Responsibilities of ASDs 1. Invest a minimum amount of two hundred million shillings in the Fixed Income Securities Market Segment turned over every six months either on sale or purchases 2 Trade 2. T d and dddeall iin minimum i i lots l off five fi million illi
Slide 40: Small and Medium Market Segment (SMEX)
Small and Medium Market Segment (SMEX) 40 OFFICE OF THE CHIEF EXECUTIVE
Slide 41: Small and Medium Market Segment (SMEX)
Small and Medium Market Segment (SMEX) NSE cognisant of the need for SMEs to gain access to cost effective ff i capital i l to fund f d growthh andd expansion i The current market structure is being g revised to better accommodate the specific needs of the SME market segment. This will be through th
Slide 42: Demutualisation
DEMUTUALISATION 42 OFFICE OF THE CHIEF EXECUTIVE
Slide 43: Demutualisation
DEMUTUALISATION The Exchange sees demutualisation as a crucial plank in strengthening its professional and operational capacity. On March 4 2010, the Members of the Exchange (NSE) held an Extra-Ordinary General Meeting (EGM) to pass resolutions on Demutualization. The Members unanimously approved: a
Slide 44: Demutualisation
DEMUTUALISATION 4. The Members have approved the proposed post demutualisation Memorandum and Articles of Association of the Nairobi Stock Exchange 5. The Members have authorised the Board of Directors of the Nairobi Stock Exchange (NSE) to deal with any other matters, including statutory requiremen
Slide 45: Other Regulatory Developments
OTHER REGULATORY DEVELOPMENTS 45 OFFICE OF THE CHIEF EXECUTIVE
Slide 46: Other Regulatory Developments
OTHER REGULATORY DEVELOPMENTS In 2009, the Authority utilizing the Ministry of Finance Financial and Legal Sector Technical Assistance Project (FLSTAP) embarked on the most comprehensive review of the capital markets regulatory framework to date. It has exposed for public comments, rules and regulat
Slide 47: Other Regulatory Developments
OTHER REGULATORY DEVELOPMENTS 6. Continuing Disclosures Obligations; 7. Asset backed Securities; 8 Real Estate Investment Trusts; 8. 9. Internet Trading; 10. Takeovers; 11 the Compensation Fund; 11. 12. Advertising; and Conduct of Business and Corporate Governance regulations for market intermediari
Slide 48: Other Regulatory Developments: Draft Bills
OTHER REGULATORY DEVELOPMENTS The Government has also tabled the following draft bills in order to provide an enabling environment for business and investments. investments Some of these include; 1 The Companies Bill 1. 2. The Kenya Deposit Insurance Bill 48 OFFICE OF THE CHIEF EXECUTIVE
Slide 49: The Draft Companies Act
THE DRAFT COMPANIES ACT Issue Comments Share Repurchases - Sections 274- Sections 274 – 277 which do not permit a 277 limited company to acquire its own shares should be deleted. a t 18 Part 8 Takeovers a eove s etc If the t eCCMA iss to have ave tthe e functions u ct o s conferred on it by or under
Slide 50: Complaints Handling Unit (CHU)
COMPLAINTS HANDLING UNIT (CHU) 50 OFFICE OF THE CHIEF EXECUTIVE
Slide 51: Complaints Handling Unit (CHU)
Complaints Handling Unit (CHU) Since its launch in August 2009 to date March 2010, the web based CHU has received 178 complaints. Out of these 112 cases were resolved and 89 are in progress. Also in the same period, CHU received 188 market queries other th complaints than l i t were received. i d Nu
Slide 52: Complaints Handling Unit (CHU) SMS 8485
Complaints Handling Unit (CHU) SMS 8485 The 8485 service was launched on the 17th of December 2009. Since the inception CHU SMS system has received total complaints of 988 complaints and queries, 773 cases have been resolved and 198 are in progress. CHU SUMMARY Through the Website Through the SMS TO
Slide 53: Thank You, Questions?
THANK YOU QUESTIONS? 53 OFFICE OF THE CHIEF EXECUTIVE
Nairobi Securities Exchange — The 3rd Listed Companies Forum (March 2010) on 6ix