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Wednesday, October 24, 2007

The implications on the NSE Of the chairman’s political affiliations



Guest column By John Maina.

Many have been quick to politicise comments made by ODM Presidential Candidate Raila Odinga about the NSE. They have singularly associated the share index downward trend to his earlier comments on drug money finding its way to NSE also his concerns of share manipulation by a few well connected individuals. Paul Muite the chair of (Departmental Committee on Justice and Legal Affairs) similarly expressed the latter concerns albeit both politicians did not give details.


Chairman of the NSE, crafty Jimnah Mbaru

On Raila Odinga’s comments many have castigated him as an anti-development, alleged he is a communist, thus he would nationalise the listed companies. Others have even argued that he is a propagandist seeking political mileage.

However, many have overlooked the fact that Raila himself owns various private businesses and has strongly argued against his distracter that he has heavily invested at the NSE

Moreover, many people have glossed over others factors likely to be impacting on the downward trend. Such include, investors disposing of share in readiness to safcom IPO and the Christmas festival.

Other reasons as recently pointed by the NSE board are the rising inflation resulting in disposal of stocks so as to buy basic commodities.

Jittery investors holding back in anticipation of the political transition and uncertainty on the direction that the stock market is taking cannot be ruled out either.

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2 comments:

Anonymous said...

Jimnah Mbaru is also the owner of Dyer and Blair.

And he has used his influence as Chairman of the NSE to ensure his company controls a huge % of trade.

kalamari said...

Hii mambo ndiyo waKenya wamekata!! Change is a must. With investor concern in mind, it is essential that a stock market of good repute be politically impartial. What we are seeing in Kenya is the uncovering of the golf-buddy-syndrome that has infected the stock market for many years. Do we want a market of international standards or one that's a conduit to money laundering as evidenced by some of the dubious insider trading transactions hidden from the public (excluding I).
Any person investing in Lake Victoria Fish Company (symbol: LVFC) stock expects nothing but acceptable fluctuations in market conditions affecting price. Now if a whole NSE top dog crosses seas and oceans to spread fear to the very people encouraged to indulge in the buying of shares, what next?
The real problem is the absence of 'teethful' regulatory bodies overseeing our stock market. With the absence of strict regulations and common sense standards, Raila's drug money claims cannot be termed as far fetched. Why is Livondo flying choppers and why is the KRA hesitant to bite his ass? You see, what Kimunya left out of his fish comment is the this, "The NSE has it's owners".

That said, whereas politics influences the performance of stock markets the world over, even Raila has no business addressing politics on the trading floor. Excluding Margayans' money, the in and outs from the Middle East and South America, the rest of the peanut money is yours; remember KenGen?

Simple calculus: There's less than 100 listed stocks in Kenya so one can determine the outstanding shares of the entire market on an individual security level. Do a simple spreadsheet aimed at calculating the actual value of the market based on previous day closes and tell me if its anywhere close to 57 billion Kshs.

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