Ugandan power distributor Umeme’s shares failed to trade for the second consecutive day, following its cross-listing at the Nairobi Securities Exchange (NSE) on Friday.
Stock dealers at Old Mutual Securities said there were bids at various times of the day at different prices, but no offers.
“There was no stock available for trading. It may take some time before we see a trade,” said Alistair Gould, head of trading and product development at Old Mutual Securities.
Mr Gould said that at some point in the afternoon there were bids for 10,000 Umeme shares at Sh4.95, which is 43.75 per cent below the Friday listing price of Sh8.80 per share.
The NSE trading regulations limit daily fluctuation of share prices of listed companies at 10 per cent on ordinary trading days where the company has not issued any material announcements.
Umeme’s shares, which were listed by introduction, have not traded at all, which means they have not yet set the reference point on which the 10 per cent limit will be based.
The power firm’s revised information memorandum released last week indicated Kenyan investors were holding 34.33 million shares accounting for 2.11 per cent of the company’s total issued shares as at November 28.
Investors had to open electronic accounts in Uganda as one of the requirements to be eligible to participate in the initial public offering (IPO) that closed on November 7.
Investors who wants to trade their shares in Kenya will have to convert them into a physical certificate, bring it to Nairobi, then convert the shares back into electronic form because share custody firms and stock exchanges in the East African region are not linked.
At the Uganda Securities Exchange (USE), the stock traded 4,900 shares at Sh8.88 (Ugsh275). As at the close of trading there were outstanding bids for 85,100 shares and outstanding offers of 2.17 million shares.
The management of Umeme said they cross-listed the firm to improve its liquidity and give investors a variety of platforms in which they can trade their shares.
“International investors are very interested in liquidity particularly when they want to change a position. Bigger markets give greater liquidity and it effectively attracts more investors,” said managing director of Umeme during the launch of trading in Nairobi last week.
He said the company’s dividend policy to pay out 50 per cent of its after tax profits is sustainable because the firm’s contract with Uganda allows it to make a 20 per cent annual return on the total capital expenditures which it makes.
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