CMA Chief Paul Muthaura. Photo/kbctv.co.keForeign companies will soon start trading in global depository receipts in Kenya following the completion of guidelines governing the trade.
The Capital Markets Authority says the instruments will help deepen the Kenyan Capital Markets, which has historically relied on stocks, bonds and bills to grow.
CMA Chief Paul Muthaura says a number of foreign companies have shown interest to start trading with the receipts.
In the developed markets many companies utilize the use of global depository receipts and the global depository notes as a means of raising cash in new and existing markets without necessarily listing on the local exchange markets.
In Africa the trade in GDRs and GDNs is prevalent in South Africa and Namibia where foreign companies have been flocking their markets to sell shares without listing in the local markets.
As part of deepening the local security market the CMA plans to authorize the use of the notes and the receipts to raise cash and expand the products available to investors.
Speaking during the launch of the capital markets soundness quarterly report CMA Chief Muthaura says the authority has completed drafting regulations with various companies expressing interest in selling their shares through the receipts.
The soundness report says the capital market in Kenya is still dominated by foreign investors who make up more than 70 percent of daily participants in the market.
The report further shows 5 companies’ account for more than 60 percent of all shares traded on the market daily.
The government remains the biggest player in the bills and bonds, while the securities market has been dry on new listings.