Capital markets remains resilient despite the threat posed by Covid-19
Nairobi, 29 April 2021… Despite the threat posed by the Covid-19 pandemic, capital markets remained resilient with the Kenyan economy expected to weather the Covid-19 storm to register a 6.4 percent growth rate.
Speaking during the media briefing for the Capital Markets Soundness Report for Quarter One 2021, the Capital Markets Authority (CMA) Chief Executive Officer, Mr. Wyckliffe Shamiah, noted the projected economic growth is expected to support a steady recovery of the capital markets.
Mr. Shamiah said; ‘’there is focused implementation of the Post Covid-19 Capital Markets Recovery Strategy to harness the unique advantage of the capital market especially in playing a facilitative role in promoting uptake of capital market products and additional listings’’.
Mr. Shamiah also disclosed CMA would be engaging the National Treasury & Planning for consideration of guidelines for issuance of County Bonds to support County Bond programmes on the back of a growing interest from counties such as Laikipia to leverage the capital market to finance key projects.
Despite the optimism, Covid-19 still posed risks around socio-economic disruption and its likely dampening of capital markets activity and the sustainability of regulated entities in a period of sustained erosion of their incomes.
On the domestic front, market infrastructure remained resilient with the Nairobi Securities Exchange (NSE) transitioning to a new brokers network in February 2021 and integrating its bond system with Refinitiv’s Fixed Income Call Outs Application. These solutions enhanced the robustness of the trading infrastructure building on the resilience of the local capital markets given the advances in network security, efficiency and stability.
Regionally, peer jurisdictions prioritized uptake of capital markets products, rollout of new policy and regulatory frameworks and fostering innovation in the capital markets amongst other measures. Globally, capital markets remained robust with a number of jurisdictions undertaking regulatory revisions designed to steer domestic markets to recovery amidst the challenging environment posed by Covid-19.
The Centum Investment Company’s issuance of a Kshs3 billion medium term note together with Acorn Investment Management Limited listing two of its REITs (D-REIT and I-REIT) on the NSE Unquoted Securities Platform worth Kshs7.5 billion served to signal growing issuer confidence in leveraging the capital markets to mobilise long-term funding.
BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY