The most direct way to invest in Kenya's publicly traded companies is to trade on the Nairobi Securities Exchange, located in the country's capital of the same name. NSE is open Monday to Friday save for Kenyan public holidays, with working hours between 9 a.m. and 3 p.m. local time, GMT +3. Transactions are carried out in Kenya shillings, KES, therefore you must be prepared for the fluctuations that come with prevailing exchange rates. Your investment strategy should be guided by how long you want to invest in particular stock, your risk appetite, financial health of the companies and individual company’s management and shareholders.
The NSE operates by selling shares of about 60 listed companies categorized into four sectors: agricultural, commercial and services, finance and investment and industrial and allied. Research these companies by analyzing the FTSE NSE Kenya Index Series that provides a comprehensive and complementary set of indices measuring the performance of the major industry and capital segments of stock market. Individuals trade through brokerage firms, and even though the NSE has enacted the Automated Trading System to enhance automated trading, your money is credited to your account three days after the sale of shares. Bought shares are credited instantly.
If you are a U.S.-based investor, open an account with a Nairobi-based brokerage firm by filling out forms -- posted on its website -- and attaching necessary documents, including a face photo and a certified copy of your driver’s license or passport. The firm will open a Central Depository and Settlement account for you, where potential shares will be held and traded electronically. Some brokerages may require the documents be scanned and emailed. Send original notarized copies of your account application forms to the brokerage.
Buying and selling shares on the NSE can only be accomplished through the services of authorized stock brokers, who liaises with stock agents to help clients access the market. Once you have a CDS account, you can trade by instructing your broker to execute the buy or sell orders. Arrangements should be made beforehand about the security of communications, whether email, phone, fax or mailed instructions. The minimum number of shares you can buy is 100, thus the minimum value depends on the particular shares you are transacting. You pay commission on every transaction.
NSE stock prices are determined by a number of factors including company performance, corporate operations, any good news and a company's general financial outlook. Once you have set up your NSE brokerage account, there are two ways you can make money. The first is capital gain, where shares are sold for higher prices than they were purchased. The other is dividend gains, where the company shares profits by distributing dividends to its shareholders.
Based in Los Angeles, Billy Max has been an assistant professor of mechanical engineering with a state university, and has been writing engineering and business and finance-related articles since 2005. His articles have appeared in IEEE Transactions and Business Solutions websites. Max holds a doctorate in engineering, and concentrates on technology, policy and business development.