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The East African : Aug 22nd 2015
MONEY AND EQUITY MARKETS AUGUST 22-28,2015 CHANGE OF FORTUNE MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND MONEY AND AND EQUITY MARKETS AUGUST 22-28,2015 CHANGE OF FORTUNE Regulations through a June 1 QUITY MARKETS AUGUST 22-28,2015 CHANGE OF FORTUNE Regulations Regulations through a June 11 gazette notice abolishes the 75 per cent threshold of foreign ownership in listed companies. However, the Cabinet Secretary for the National Treasury may prescribe the maximum foreign holding in an issuer or listed company that is considered of “strategic interest.” “The removal of restrictions on foreign shareholding in our market is one of the key recommendations of our capital markets master-plan, which is meant to address the challenge of liquidity in the market. Because of the uncertainty relating to foreign shareholding, it meant that certain transactions could not occur,” Paul Muthaura, CMA’s acting chief executive, told The EastAfrican. In a July 31 circular, the Nai- robi Securities Exchange instructed stockbrokers to notify the market regulators prior to placing orders that could result in an increase in the foreign holding beyond 75 per cent of HOW OTHERS DO IT In Brazil there are no general restrictions on foreign ownership except in certain sectors such as journalism and broadcasting, and aviation. In the US there are no general restrictions on foreign ownership of shares. However, under the Exon-Florio the total issued capital of a listed company. “The CMA will then seek guid- ance from the National Treasury on a case-by-case basis and advise the trading participants accordingly,” said Geoffrey Odundo, NSE chief executive. Official data from the Capital Markets Authority shows that NSE recorded a 64 per cent increase in net foreign outflows during the first six months of the year in the face of a weakening currency, high interest Amendment, the US President can decide on a case-by-case basis to block, unwind, or make subject to certain conditions . In France investment in a sensitive sector that is deemed to be of national interest requires prior approval from the Ministry of Economy rates and soaring inflation. Foreign investors were net sellers during the period, disposing of company shares worth Ksh447 million ($4.26 million) in June compared with Ksh273 million ($2.6 million) in January. Overall, foreign share-sale increased to Ksh18.1 billion ($172.87 million) from Ksh4.67 billion ($44.6 million) compared with foreign purchases, which increased to Ksh17.65 billion ($168.57 million) from Ksh4.4 billion ($42.02 million) over the period. The share of foreign inves- tors on the Kenyan bourse has also been in decline, falling from from 29.8 per cent in 2004 to to 15.77 per cent at the end of June. East African institutional investors, on the other hand, grew to 73.17 per cent from 47.4 per cent while East African individual investors fell to 11.06 per cent from 22.8 per cent in the same period. “Kenya is opening up to glo- bal best practices, which will help in the international rating of its stockmarket. Currently, foreign investors are looking to allocate funds to exchanges in emerging markets that have been accorded higher ratings by Morgan Stanley Capital Interna- Kenya joins Tanzania in lifting cap on foreign ownership of listed firms The decision is in line with the count≥y’s e≠o≥ts to t≥ansfo≥m Nai≥obi into an inte≥national financial hub tional [MSCI] indexes,” said Amish Gupta, director-in-charge of investment banking at Standard Investment Bank (SIB). It is argued that within the medium term, Kenya’s ranking will be elevated from frontier market to emerging market status, as classified by the globally recognised MSCI. This rating will unlock addi- tional capital flows and investment finance for the Kenyan market. “Opening up the 75 per cent threshold will spur international capital flows into Kenya and enhance NSE’s position on the world map,” said Mr Gupta. Kenya is seeking to actively promote its attractiveness as an investment destination for financial services and as a capital markets gateway to East and Central Africa that fully interconnected with other international financial centres. 45 “The removal ... is one of the key recommendations of our capital markets master-plan.” Paul Muthaura, CMA acting chief executive Last year, when Tanzania lifted restrictions on foreigners owning more than 60 per cent of companies listed on the DSE, the move opened up the shareholding of some of the country’s biggest and profitable firms to non-Tanzanians, resulting in increased foreign inflows and earning DSE the best performing bourse in Africa vote from reporting firms Bloomberg, Global Business Outlook Survey and Thomson-Reuters DSE’s market capitalisation grew by 40 per cent to $12.04 billion with the total number of listed companies increasing to 22. Its local companies index climbed 27 per cent, the highest growth on the continent. The Egyptian Stock Exchange came in second with its main index achieving a 31.6 per cent increase while the Uganda Securities Exchange emerged third with a jump of 26.5 per cent. The NSE, which emerged fourth, registered a drop, emerging at 19.2 per cent. Previously, Tanzania only per- mitted investors from within the EAC to acquire up to 40 per cent of offered government securities while individual countries were not allowed to purchase more than two-thirds of the 40 per cent quota.
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