NSE to introduce day trading by October

NSE to introduce day trading by October

The Nairobi Securities Exchange (NSE) is expected to initiate day trading this quarter as part of innovation to enhance market activity.

Day trading refers to the practice of purchasing and selling a security within a single day/trading session and features commonly on currency and stock exchanges.

The roll out of day trading will be a welcome call to local investors who have previously clamored for the activation of intra-day trading to raise the allure of the Kenyan bourse.

“Day trading will allow investors to trade on one position, two or three times per day. This will likely double our turnovers,” NSE Chief Executive Officer Geoffrey Odundo told Citizen Digital in an interview on Tuesday.

The introduction of day trading is an extension of ongoing initiatives to bolster investor participation in the markets which has also seen the introduction of the unquoted securities platform (USP) earlier this year.

On the same note, the NSE is expected to introduce securities lending and borrowing (SLB) before the end of this year.

SLB, an initiative allowing market participants to lease out securities on a short term basis is already being piloted by the Central Depository and Settlement Corporation (CDSC).

The successful roll out of the new initiatives is tipped to firm up the rebound of the NSE after a tumultuous 2020 that was primarily marked by the exit of foreign investors.

The capitalization of the NSE equities market for instance slumped by an estimated Ksh.200 billion last year to a valuation of just over Ksh.2.3 trillion.

So far in 2021, the exchange has seen its returns rebounds to mark double digit growth anchored largely on price gains among large cap companies such as banks and Safaricom.

On the same note, the NSE is trading at price to earnings ratio above the historical average reflecting the fair valuation of traded stocks.

Odundo expects the NSE to register resilience in the second half of the year driven in part by the improved performance of listed entities.

“We are happy with the half year performance having been ranked as the best performing market among our peers including South Africa, Nigeria and Egypt,” he added.

“We’ve seen a good recovery especially from the banking stocks with the prices now appreciating. What we are also seeing is the restoration of retail investors. All round, all the pools of capital are active. With that in mind, we can only project a more sustainable performance going forward as everyone comes out of the woods.”

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