From left- Capital Markets Authority acting CEO Paul Muthaura, CFC Stanbic Bank head of investment banking Anne Aliker , Umeme chairman Patrick Bitature, Umeme managing director Charles Chaman, and Nairobi Securities Exchange CEO Peter Mwangi toast during the listing of the company’s share 2012. Salaton Njau
Uganda’s power distributor Umeme registered zero trading on its bourse debut, bringing to the fore difficulties of trading in cross-listed securities in the East African region.
The Friday Nairobi Securities Exchange (NSE) launch is meant to offer investors multiple platforms for trading and improve liquidity of the shares according to disclosures in the company’s information memorandum.
This is, however, hampered by the lack of an appropriate infrastructure and framework to facilitate efficient trading of shares across borders.
“As an investor, I should be able to access my assets from any of the markets just like in the banking system and the regulators and market operators should fast-track this. It has taken a very long time,” said Job Kihumba, an executive director at Standard Investment Bank.
Discussion on proposals of a mechanism for cross-border trade has raged on since Kenyan companies started cross-listing.
During the Kenya Airways rights issue early this year, where additional shares were on offer in Nairobi, Kampala and Dar es Salaam, challenges in trading cross-listed shares also arose. Umeme, on Friday became the first to break the trend where only Nairobi-based firms venture into other exchanges.
Jubilee Insurance, East African Breweries (EABL), Nation Media Group (NMG) and KCB are cross-listed at the Dar es Salaam Stock Exchange (DSE) while KCB and NMG are cross-listed at the Rwanda Stock Exchange (RSE).
Kenya Airways, Equity Bank, KCB, NIC Bank, Jubilee Insurance, EABL and NMG have listed at the Uganda Securities Exchange (USE). Others like Uchumi and Centum have plans to go regional.
Shares of the power distributor are expected to have very few trades much like shares of other Kenyan companies which are cross-listed at the USE, DSE and RSE, which rarely trade.
“Trading of these shares will be made easy once the proposal of inter-depository transfers which is currently before the regulators and which has been made by the exchanges is the region is approved,” said Peter Mwangi chief executive officer NSE.
On Friday, the counter saw bids of 100 shares at Sh8.75, but no supply was available, an indication of the hurdles investors have transferring shares between bourses.
According to the information memorandum, 34.33 million shares or 2.11 per cent of issued shares of the power distributor were held by individuals with Kenyan addresses. They had to open electronic accounts to be eligible for allocation.
These investors will now transfer those shares, which are currently in electronic form, into a physical certificate, bring the document to Nairobi and convert them again into electronic form so as to trade. Peter Muthaura, acting chief executive officer Capital Markets Authority, said the regulators were reviewing the structure and implementation could start by the end of the first quarter of next year.
“This will really be the tool to make sure we are able to efficiently trade securities across borders in multiple exchanges through multiple depository agencies,” said Mr Muthaura adding that the launch of East African depository receipts would fully operationalise the cross-border trading aspects that have continued to dampen regional trade in securities.
