The Kenyan stock market NSE plays a crucial role in creating wealth for individuals and big companies. To make money and avoid or minimize losses requires one to equip themselves with the correct information. Kenya boasts of a vibrant economy, improving infrastructure and a young energetic population. For these and other reasons, investors can expect to reap big in a safe a secure market.
Opportunity for Investors
The recent intervention by the government to cap interest rates has seen banks shun small traders, and individuals who they view as high risk. Instead, banks are now focusing attention on both the government’s and other big companies’ appetite for loans. As a result, many Kenyan stocks have been trading at multi-year lows due to the high-interest rates and instability in the banking sector. This has given investors an opportunity to enter the market in anticipation of exceptional long-term returns.
Trading Stocks in Kenya
Traders can trade in stock by buying shares from companies listed on the Nairobi Stock Exchange (NSE). The NSE is ranked 4th in Africa in terms of market capitalisation.
Traders can make money through two main methods:
- Earning dividends – This is paid out to shareholders at the end of a company’s financial year, once the company has declared profits
- Speculating – The second method involves buying shares and holding them until they gain value. You can then re-sell them for a profit.
Tips for Stock Traders
Before trading shares in Kenya, always research and analyze risk before rushing in to invest. Information on monetary policy changes that can affect the way local companies do business is important. Therefore follow keenly news from the Central bank of Kenya. Fluctuations are part of the stock market so don’t panic, and ditch your stocks at a loss because its value is dropping.
Foreign investors living outside Kenya may find it challenging to collect dividends. Most Kenyan companies pay out dividends directly to the investor’s bank account in Kenya or by cheque denominated in Kenya shillings. It’s even harder to cash the cheque in a U.S or U.K bank. Unless you plan to be visiting Kenya to collect your cheque, instruct your broker to open a nominee account for you. This will allow the broker to collect dividends on your behalf, and deposit them directly into your trading account.
Kenya is an emerging economy with a large agricultural sector. A majority of the commodities traded in Kenya are soft commodities – grown by farmers. They include cash crops such as:
- Horticultural produce like cut flowers.
Most of these commodities are mainly for export. By using the Futures Market, farmers have a platform to trade their produce under stable commodity prices and a ready market. When the stock market outlook is uncertain, volume in the futures market increases. Investors can use futures to hedge bets and secure certain assets at their current price for an agreed delivery date.
Many international brokers such as IQ Options accept traders and trading in Kenya’s stock market. You can open an account online, and fund your account with a debit card or online payment platforms such as Skrill, Neteller, Webmoney, and many others.
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