East Africa: EA Stock Markets Recorded Depressed Performance in 2018 - Report

Nairobi — East African stock markets recorded a depressed performance in 2018, according to the Alpha Investor's market report.

The report attributes the performance to factors that include a global wave of emerging markets sell-offs in shares and currencies and the raising of interest rates by the US federal reserve, further strengthening the dollar.

In Kenya, profit warnings from listed companies and post-election inertia contributed to capital flight from the stock market.

In Uganda, dull trading activity and a slight devaluation in the Ugandan shilling further discouraged investments in the country.

In Tanzania, price volatility on some counters led to declining participation by foreign investors who contribute about 80 percent of the market's liquidity.

Challenges facing the stock markets

Low liquidity levels are the major challenge facing East African stock markets, with bourses dominated by few blue-chip companies.

This is according to the Alpha Investor's market report, which was commissioned by I&M Burbidge capital, the East Africa Private Equity Venture Capital Association.

In Kenya, the low levels are partly attributable to stringent listing requirements that have discouraged potential issues from the bourse, and high costs associated with listing that offset any potential tax benefits to a company.

However, the Capital Markets Authority is undertaking several initiatives to attract companies to list on the NSE, based on the CMA strategic plan 2018-2023.

See What Everyone is Watching

More From: Capital FM

Don't Miss

AllAfrica publishes around 800 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.