The secondary bond market turnover rose by 29 percent in 2018, marking it the second highest ever sales for the instruments at the Nairobi bourse for eight years.
The activity in the bonds counter hit Sh562 billion, making 2018 the only year apart from 2012 when the Nairobi Securities Exchange (NSE) bond turnover has exceeded Sh500 billion. In 2012, the turnover stood at Sh566 billion.
Last year’s demand for the fixed-income instruments was driven by diversification of income by commercial banks and non-bank institutions as well as by foreign investors.
Some foreigners who were divesting from their equity portfolio on the Nairobi Securities Exchange (NSE) moved cash into the fixed-income market driving up the turnover numbers.
“The bonds market outpaced 2017 numbers in activity by 29 percent to Sh562 billion from Sh435 billion traded in year 2017,” said the NSE in an update on the 2018 market performance.
The amount is for the sales side but the buying side has a similar amount. Brokerages earn commissions from both the sales and buying sides of a transaction.
“The sale by foreigners of the equities saw a good number of them turn to the fixed-income side. There was a lot of liquidity on the side of bonds,” said a fixed-income expert working in a Nairobi-based brokerage house. The equities market lost Sh419 billion in paper wealth last year as prices of most listed firms fell.
The expert explained that the suffering on the equities market was not altogether bad for the stock market because it shifted a bit of the wealth to the fixed-income market, pushing up the turnover.
Besides the shift, there was also the impact of the restrictions on the movement in interest rates that saw some commercial banks as well as non-bank institutions rush to the secondary market to accumulate more bonds.
“Financial institutions were seeking to get a good piece of the action on government securities in the secondary market in the second half of the year once they realised that the rate cap was not going to be reviewed,” said the expert.
Last year, MPs retained the restriction on commercial banks’ lending rate even as they removed the one on the deposit rate. Lending rates have been restricted to a maximum of four percentage points above the Central Bank Rate since September 2016 and attempts to change this has met resistance from legislators.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.