EDITORIAL: Atlas woes offer crucial lessons for local investors

A Nairobi Securities Exchange (NSE) staff monitors electronic trade. FILE PHOTO | NMG
A Nairobi Securities Exchange (NSE) staff monitors electronic trade. FILE PHOTO | NMG 

Kenya’s capital markets have for the past few years experienced an un-ending drought of new listings, taking away the sheen from the Nairobi Securities Exchange (NSE).

The stock market has had to contend with no initial public offering or sale of shares by existing companies.  This is a far cry from the situation in the late 2000s, when listings were frequent and oversubscription common.

Companies are currently not keen on the market especially after a wave of buying by retail investors in the last decade that left small investors counting losses. The economy has not been doing well too.

As potential listing candidates stay off the bourse, a string of little-known private firms have been entering the market.

One such company is Atlas African Industries, a UK logistics firm suspended from trading at the Growth and Enterprise Market Segment (Gems). It was suspended from trading after failure to comply with continuous listing rules. All along, it has been stumbling from one strategic disaster to the next.

The oil market that it was supposed to service has been doing badly and Ethiopia, whose market it favoured, became problematic.

Atlas, also listed on London Stock Exchange, was on Monday off the internet, a matter that should cause anxiety amongst its hapless Kenyan investors. Its local advisor, Burbidge Capital—who have interestingly sought to exit the role in the past—said it was a mere technical hitch.

The Capital Markets Authority (CMA) said it would engage the company. Whatever the case, the Atlas debacle calls for more vigilance when admitting companies to the bourse.

Granted, one would argue London has better capacity to vet such firms but the CMA should also up its capacity for vetting and preferably remove companies from the listing early enough. It will be recalled that Imperial and Chase banks went down after offering multi-billion shilling bonds to investors.

Apart from proffered evidence, it should use intelligence to ferret out dud firms.