The Nairobi Securities Exchange Market
What do you know about the Kenya’s exchange market? The Reikims team led by Mr. Paul has made sure that you are not left behind. So let’s get enlightened. Shall we?
Nairobi stock exchange was founded in 1954 and is one of the fast growing economies in Africa. It has about six decades’ history in listing equity and debt securities. It offers a world class facilitation to trade for both local and international investors who are interested in the Kenyan and African economic growth. It has played vital role in the growth of Kenya’s economy by encouraging more investments and savings as well as helping investors access cost-effective capital.
NSE operates under Capital Market Authority of Kenya and it’s a full member of the World Federation of Exchange and also a founder member of the African Security Exchange Association (ASEA) and the East African Security Exchange Association (EASEA). NSE offers different products to its vast number of customers. Some of this products will be discussed here and also we we’ll take a deep look on which of this products gives a higher return compared to the rest and which is the most risk free investment that as an investor would be favorable to you in the future.
One of the most interesting products that I would like us to take a look at in NSE are the NEXT Equity Index Futures (EIFs)- These are derivative instruments that give investors exposure to the price movements on an underlying index. The participant can profit from the price movements of a basket of equities without really trading the individual constituents or equities. This indexes give the investors the ability to sell or buy an underlying listed financial instrument at a fixed piece on a future date. Benefits of NEXT EIFs is price transparency and liquidity making them easy to be sold as easily as they are bought. Two, they have lower transaction cost compared to buying and selling the baskets of securities making up the index, they have centralized clearing making they trade secure. The last benefit of NEXT EIFs is the reduction of counter-party risk as a result of trading through the exchange.
The next product on NSE is the NEXT Single Stock Futures (SSFs), these are derivative instruments that give the investor exposure to price movements on an underlying stock. The parties here agree to exchange a specified number of stock in a company for a price agreed today or at the moment of purchase. They provide an effective and transparent hedge against unfavorable share price movements and are easy to liquidate and trade with. They give the investor the benefit to benefit from both the downward and upward movement of share prices and therefore the investors can have exposure to the price movements without really owning the underlying share.
As an investor you would like to know which among the two NEXT EIFs and SSFs is the best for you. This will require the investor to have a deeper dive into these two products and use their discretion depending on what they are looking forward to achieving and therefore make a decision that will highly favor them. NSE also have some trainings that they give to prospective customers and therefore as an investor you can check the training times and be among the many investors who are learning on the security exchange and the benefits that are derived from you having some securities as an investment.
In conclusion today we didn’t take time to look at the various securities that are there in this market but the two products that have been discussed are worth looking into and even though indexes are neither risker nor less risker compared to individual securities, the return is highly satisfying.
