• CAPITAL MARKETS UNIVERSITY CHALLENGE 2018

    CAPITAL MARKETS UNIVERSITY CHALLENGE 2018

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    A proactive regulator of competitive and robust capital markets

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    Developing Kenya's capital markets to be an investment destination of choice through facilitative regulation and innovation.

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    Promoting investor education, awareness and interest in the capital markets

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    Strengthening institutional capacity to effectively and efficiently deliver on its mandate

 

As part of its investor education initiatives, the Capital Markets Authority intends to conduct a National Capital Markets University Challenge beginning July 2018 that will comprise of 5 stages leveraging both technology and standard forums leading to the Grand Finale in November, 2018. This is an inter-university competition that will primarily focus on testing the participants’ knowledge and understanding of capital markets and financial issues.

  1. 1.OBJECTIVES OF THE UNIVERSITY CHALLENGE
  • To increase the capital markets knowledge base and awareness among the youth;
  • To encourage a culture of savings and investments through information dissemination on the capital markets;
  • To encourage discussions on capital markets with a view to increase the potential investor base;
  • To leverage the academia as a key stakeholder CMA by targeting university students as potential investors;
  • To leverage on technology in promoting investor education and public awareness among the youth.
  1. 2.GENERAL STRUCTURE OF THE CHALLENGE

The challenge will comprise of the following five stages which will be staggered over time through various delivery mechanisms for maximum impact and to allow for effective participation.

  1. i.Stage One (Online Examination) - Elimination Stage
  • Leverage technology by through an online examination process;
  • Candidates of participating universities only will be required to register;
  • Once a participant opens the exam within the window during the examination time allotted for the university, the exam will have to be completed within a specified period to be provided;
  • Exams will be multiple choice;
  • No participant can repeat or reenter to take an exam;
  • The scores and names will be selected subject to a basic selection algorithm;
  • Only the top 100 winners from each university as identified by the system will proceed to register for Stage Two.
  1. ii.Stage Two (Online Examination) - Scavenger Hunt Stage
  • The stage will also be online except that the response to the questions will require one to actually go through our website and Resource Centre Portal to locate specific information before answering the question;
  • Once a participant opens the exam within the window during the examination time allotted for the university, the exam will have to be completed within a specified period to be provided;
  • No participant can repeat or reenter to take an exam;
  • Exams will be multiple choice;
  • The scores and names will be selected subject to a basic selection algorithm;
  • The objective of this stage is to select the top 1o students with the highest scores from each university to proceed to the next level.
  1. iii.Stage Three (University Presentation Stage)
  • During this stage the Top ten student from each participating university will make public presentation to fellow students and judges from CMA and selected university faculty members/lecturers;
  • The topics will be chosen by the student and approved by CMA;
  • The objective of this stage is to have the top 2 students from each university to compete in the Semi Finals below.
  1. iv.Stage Four (Semi – final stage)
  • This will consist of the two short-listed students from each participating university who will be invited to the Authority Conference Room to present and respond to structured questions;
  • A panel of judges will comprise of CMA staff members and other stakeholders;
  • The output of this stage is for the top 12 students overall to proceed to the Grand Finale below.
  1. v.Grand Finale
  • This will consist of the top 12 students overall who will make a 20-minute presentation to invited public and university students from all participating universities, CMA staff and stakeholders at a Hotel in Nairobi CBD;
  • The panel of judges will comprise of CMA staff members and other stakeholders;
  • A cocktail to celebrate the winners will also be included as part of the program in the evening.
  1. 3.RULES OF THE CHALLENGE
  • The Capital Markets University Challenge will be open to all continuing undergraduate students at the Universities within Kenya;
  • The participating students should not in any way be related to employees of Capital Markets Authority or any other officials who will be involved in the challenge.
  • Only students in good standing will be eligible to participate;
  • Students must be at least 18 years or older to participate;
  • The Authority will award printed certificates to the top 10 winners only. Other participants will be able to download certificates of participation during the online stages and via email for the 3rd stage.
  1. 4.CAPITAL MARKETS UNIVERSITY CHALLENGE PARTICIPATION REGISTRATION AND STAGE ONE EXAM PERIOD
  • The exam registration period will be open from Mid July 2018;
  • Stage One of the challenge will begin the second week of August 2018 ( universities will be informed of specific timeframe prior);
  • More registration details will be provided to each participating University.
  1. 5.FABULOUS PRIZES TO BE WON

Grand winner:

  • Visit the Securities Exchange Commissions and the Securities Exchange in a robust  African country for three days;
  • Winner’s university receives books and materials and capital markets literature worth Kshs.75,000.00.

First runners-up:

  • Visit to the Securities Exchange Commissions and the Securities Exchange in a robust African country for three days.

Second runners-up:

  • Visit to the Securities Exchange Commissions and the Securities Exchange in a robust market in an African country for three days.

Participants 4-12:

  • Kshs 5,000.00 each to buy a portfolio shares listed at the Nairobi Securities Exchange;
  • Certificate of participation for all participants.

 

PARTICIPATION IS FREE!!!

 

  Date of enforcement action Licensee Breach Enforcement action taken
1

2.10.2017

Bid Plantation Ltd

Wash trades conducted on Eaagads Shares counter on 23rd and 24th February 2017

 

Regulatory warning and financial penalty of Kshs 30,850.

2 12.02.2018 Kenya Orchards Ltd

failure to publish interim financial statements for half year ending June 2017 in two newspapers of national circulation

 

Financial penalty of Kshs 220,000

3 23.02.2018

Mr. Kumar Sheth

Market manipulation of Nairobi Business Ventures Ltd shares

 

Warning and a financial penalty of Kshs 50,000.

4 8.03.2018 East African Portland Cement Plc Failure to publish a profit warning in respect of financial results for the year ending 30th June 2017.

Financial penalty of Kshs 50,000 for failure to issue a profit warning and regulatory directive to submit plan within 3 months setting out how they want to deal with negative working capital.




INVESTING IN SHARES     COMPANY PERFORMANCE RATIOS     DEFINITION OF TERMS/RATIONALE    

Investing in a Share

PURCHASE PRICE (KES)
NUMBER OF SHARES
PURCHASE COMMISSION
Default 2.1%
ESTIMATED ANNUAL DIVIDEND PER SHARE (KES)
SALE PRICE(KES)
SALE COMMISSION
Default 2.1%

B. Company performance ratios

CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
TOTAL LIABILITIES
EQUITY
REVENUE
GROSS PROFIT
NET PROFIT

PURCHASE PRICE - This is the purchase day's share price. It can be obtained from the NSE Website or from the newspapers based on the previous day

PURCHASE COMMISSION - These are the levies an investor is charged when purchasing shares. They are pegged at a maximum of 2.1% of the total investment which is arrived at by adding percentages stated in THE CAPITAL MARKETS (LICENSING REQUIREMENTS) (GENERAL) REGULATIONS, 2002 which are:

NET BROKERAGE COMMISSION
-1.78 %
NSE
- 0.12 %
CMA
- 0.12%
CDSC
- 0.06%
CDSC GUARANTEE FUND
- 0.01 %
CMA INVSTOR COMPENSATION FUND
-0.01%
Total
= 2.1 %

DIVIDEND PER SHARE - This should be either the dividend declared and paid by the company in the last financial year or the investor's expected dividend payout

SALE PRICE - This is the price that the investor expects to sell the shares at.

SALE COMMISSION - These are levies that an investor is charged when selling shares. They are pegged at a maximum of 2.1% . Calculated just like the purchase commission

WORKING CAPITAL TURNOVER- Working capital is defined as current assets minus current liabilities. Working capital turnover indicates how efficiently the company generates revenue with its working capital. A high working capital turnover ratio indicates greater efficiency (i.e., the company is generating a high level of revenues relative to working capital.

TOTAL ASSET TURNOVER- The total asset turnover ratio measures the company’s overall ability to generate revenues with a given level of assets. A higher ratio indicates greater efficiency. Because this ratio includes both fixed and current assets, inefficient working capital management can distort overall interpretations. A low asset turnover ratio can be an indicator of inefficiency or of relative capital intensity of the business.

CURRENT RATIO- This ratio expresses current assets in relation to current liabilities. A higher ratio indicates a higher level of liquidity (i.e., a greater ability to meet short-term obligations). A current ratio of 1.0 would indicate that the book value of its current assets exactly equals the book value of its current liabilities.A lower ratio indicates less liquidity, implying a greater reliance on operating cash flow and outside financing to meet short-term obligations. Liquidity affects the company’s capacity to take on debt.

DEBT TO ASSET RATIO- This ratio measures the percentage of total assets financed with debt. Generally, higher debt means higher financial risk and thus weaker solvency.

EQUITY MULTIPLIER- This ratio measures the amount of total assets supported for each one money unit of equity. The higher the equity multiplier, the more leveraged the company is in the sense of using debt and other liabilities to finance assets.

GROSS PROFIT MARGIN- Gross profit margin indicates the percentage of revenue available to cover operating and other expenses and to generate profit. Higher gross profit margin indicates some combination of higher product pricing and lower product costs. The ability to charge a higher price is constrained by competition, so gross profits are affected by (and usually inversely related to) competition.

NET PROFIT MARGIN- Net profit margin is the percentage of revenue left after all expenses have been deducted from sales. The measurement reveals the amount of profit that a business can extract from its total sales.

RETURN ON ASSETS - ROA is a financial ratio that indicates the percentage of profit a company earn in respect to its overall resources. it is defined as net income divided by total assets.

DISCLAIMER

This Financial Calculator is developed solely for the purpose of assisting Investors to speculate their possible earnings. The Authority will not take responsibility for any loss arising from its use.

Islamic Finance Services Board Regional Conference 2018

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