The Nairobi Stock Exchange, also known as the Nairobi Securities Exchange or NSE, is a leading African exchange based in Kenya, one of the fastest-growing economies in the region. Online trading is available for customers around the world with a variety of instruments and markets, including shares, bonds and derivatives.
This article will explore what the NSE is and how it works, its history and structure, as well as the various indices, top listed companies, requirements and where to find today’s live share prices. It will also explain how you can start trading on the Nairobi Stock Exchange, with some tips to get you going. You can find a list of the top brokers offering NSE trading below.
What Is The Nairobi Stock Exchange?
The Nairobi Stock Exchange (NSE) is a stock exchange based in the city of Nairobi, Kenya. Its head offices are at an address on Westlands Road, Westlands, Nairobi, having moved to a new location and building in May 2013. While it is not one of the largest stock exchanges in the world, it is within the top 10 in Africa. The NSE has a market capitalization (cap) of KES 2.248 trillion, or around $20 billion, according to its 2020 annual report. There are around 64 companies listed on the Nairobi Stock Exchange.
Stocks and shares of the Nairobi Stock Exchange are listed and traded on its mainboard, under the symbol NSE. The role and function of the Nairobi Security Exchange are to allow investors, young and old, to trade a range of instruments. These include standard shares, indices such as the All Share Index, ETFs, derivatives (futures and options) and bonds. Daily price lists can be found on the NSE website, so check today to see current prices, latest share performance and top gainers, as well as historical data and share prices, charts and graphs. Stock updates and analysis can also be found on the live data feed provided by Wazua. A variety of brokers allow customers to trade on the Kenyan market.
Understanding the roles of the Nairobi Stock Exchange in the Kenyan economy is very important. It is one of the key features and benefits of the NSE, enhancing the growth of Kenya’s economy by encouraging savings and investment. Keeping this growth is one of the main challenges facing the exchange.
Nairobi Stock Exchange History
Stocks and shares were first traded in Kenya in the 1920s when it was a part of the British Empire. The market was not formal, as there were no rules and regulations to govern the activities. In 1954, the Nairobi Stock Exchange was setup up as a voluntary association of stockbrokers. Africans were not permitted to trade securities, so the market was confined to the resident European community. After the attainment of independence in 1963, the market opened to all Kenyan residents.
In 1988, the first privatisation occurred through the Nairobi Stock Exchange. 20% of the government shares in Kenya Commercial Bank (KCB) were sold to the public, with the government retaining 80% ownership of the bank. In 1994, the NSE 20-Share Index recorded an all-time high of 5030 points.
The largest share issuance in the history of the Nairobi Stock Exchange occurred in 1996, with the privatisation of Kenya Airways. After selling a 26% stake to KLM, the government of Kenya proceeded to offer 51% of Kenya Airways PLC shares to members of the public. More than 110,000 shareholders acquired a stake in the airline as the government reduced its stake from 74% to 23%.
2006 saw the implementation of live trading at the NSE with the addition of automated trading systems. This was furthered in 2007 when the exchange implanted its Wide Area Network (WAN), allowing brokers and investors to conduct trading remotely.
In 2014, the NSE self-listed its own shares on the Main Investment Market Segment of the NSE, after receiving permission to demutualize. It became only the second self-listed African stock exchange, after the Johannesburg Stock Exchange.
Nairobi Stock Exchange Owners & Management
The shares of the Nairobi Stock Exchange are listed and traded on the exchange’s own board. The primary shareholders (owners) are Standard Chartered Kenya Nominees (21.75% ownership), CFC Stanbic Nominees Kenya Limited (7.67% ownership), the Treasury of Kenya (3.37%) and the Investor Compensation Fund Board (3.37%).
The Nairobi Stock Exchange is governed by its board of directors, which governs all corporate actions. The board is headed by chairman Mr Kiprono Kittony and vice-chairman Mr Paul Mwai. The NSE’s CEO is Mr Geoffrey Odundo, who has a team of non-executive directors to help deal with the day-to-day management of the exchange. This involves everything such as news announcements, financial statements, 2020 performance reviews, dividends announcements for the end of 2021 and the publication of equity statistics.
The Nairobi Stock Exchange is divided into four market fragments:
- Main Investment Market Segment (MIMS): This is the fundamental fragment of the NSE and contains 48 stocks equal to 99.5% of the NSE market cap.
- Alternative Investment Market Segment (AIMS): This is the section for medium-sized organisations.
- Fixed Income Securities Market Segment (FISMS): This fragment is the market for exchanging fixed pay securities such as corporate and government securities.
- Growth Enterprise Market Segment (GEMS): This section has five registered stocks and has less rigid pre-requisites than the other sections.
Nairobi Stock Exchange Indices
The NSE All-Share Index is the primary index for the Nairobi Stock Exchange. This index represents the performance of all shares listed on the NSE and is the best indicator of the overall performance of the stock exchange. Index graphs are available showing past points from yesterday or as far back as you want to go.
Other indices include:
- FTSE NSE Kenya 15 Index
- FTSE NSE Kenya 25 Index
- FTSE ASEA Pan African Index
- FTSE NSE Kenya Govt. Bond Index
- NSE 20 Share Index (The mean of the top 20 performing companies each year)
- NSE 25 Share Index (represents the performance of Kenyan companies listed on NSE)
Nairobi Stock Exchange Listing Requirements
To be listed on the Main Investment Market Segment of the market with companies and banks like Safaricom (SCOM) and Equity Bank Group Holdings, companies must meet certain criteria. An organisation needs to submit five years of inspected financials, three of which must be productive years. It needs to have KES 50 million worth of completely settled up shares capital and KES 100 million in resources.
Nairobi Stock Exchange Trading Hours
The opening hours of the Nairobi Stock Exchange have changed throughout the years. As it stands, the NSE is open Monday through Friday from 09:30 to 15:00 East Africa Time (GMT +3).
Knowing whether a stock exchange is shut for holidays in 2022 or beyond is important for any investor. We have compiled this list of the Nairobi Stock Exchange’s holidays, so you do not have to search for a PDF every day to see if it is open. The list shows each day the exchange is closed:
- New Year’s Day – January 1st
- Good Friday – April 2nd
- Easter – April 5th
- Labor Day – May 1st
- Eid al-Fitr – May 14th
- National Heroes Day – October 20th
- Independence Day – December 12th
- Christmas – December 25th
- Boxing Day – December 26th
Top Companies / Biggest Players
The five biggest stocks on the Nairobi Stock Exchange account for 75% of all investor wealth. So, who are the biggest players? We know you do not want to waste time searching so we have compiled this list of the top five companies on the NSE with their respective market capitalization in brackets:
- Safaricom (KES 1.520 trillion)
- Equity Bank (KES 196.23 billion)
- Kenya Commercial Bank, KCB (KES 147.50 billion)
- East African Breweries Limited (KES 124.15 billion)
- Co-operative Bank (KES 73.046 billion)
Why You Should Trade On The Nairobi Stock Exchange
While you will not find any popular US companies listed on the Nairobi Stock Exchange, it does have some interesting and exciting stocks available. The NSE presents a great opportunity for investors to diversify their portfolios with companies not listed on the top exchanges, such as Safaricom and Kenya Commercial Bank stocks.
How To Start Trading On NSE
So, you are wondering how to join the Nairobi Stock Exchange and start trading. This step-by-step guide will help you start trading remotely on the NSE:
- Choose A Broker: Before you start trading on the Nairobi Stock Exchange you need to choose a broker. There are lots of things to compare when searching brokerage firms, such as their trading fees, platforms and assets. Also, if you want to trade on the move, check whether the broker offers a mobile app. Good customer service is another important aspect. Check that a range of contact options is available, including an email address and phone number.
- Open An Account: Once you have chosen a broker, complete the registration process and open an account. You may be required to complete know-your-customer verification at this point and upload proof-of-address and proof-of-identity.
- Deposit Funds: The next step is to deposit funds into your account. The Nairobi Stock Exchange trades in Kenyan Shillings (KES), so check the forex currency rates before depositing. You may incur additional fees due to the conversion. The dollar rate today can be found on Google or other charting and analytics sites.
- Research Stocks & Invest: As soon as your account is set up and funded, you are ready to begin trading. Research the various stocks available, check historical data and invest when you feel ready.
It will not happen every time but history can repeat itself. Always research historical data, statistics and trends, as they could indicate the future movement of a stock or asset on the Nairobi Stock Exchange.
If your broker offers it, start trading on a demo account first. Demo accounts are a great place to complete some training before you risk real capital on the Nairobi Stock Exchange. They allow you to learn about the platform and practise strategies.
Follow The News
News announcements can have a big impact on the values of stocks and indices. Stay up-to-date with the latest announcements and financial news so that you can get ahead of the curve with new price movements.
Final Word On The Nairobi Stock Exchange
The Nairobi Stock Exchange is home to the largest companies in Kenya. While it is not one of the biggest stock exchanges in the world, it should not be overlooked as it represents a great opportunity for investors to diversify their portfolios with exciting stocks at the heart of the Kenyan and African economies. If you want to start trading on the Nairobi Stock Exchange today, follow our step-by-step guide to choosing a broker and consider our trading tips.
Can UK Traders Buy Stock On The Nairobi Stock Exchange?
Yes, UK traders can buy stocks and shares on the Nairobi Stock Exchange. Simply register with an online broker that offers access to the exchange to begin.
Is The Nairobi Stock Exchange Worth Investing In?
The Nairobi Stock Exchange may well be worth investing in, depending on your portfolio, risk appetite and goals. The exchange provides access to some different companies not listed on top exchanges and gives investors a chance to diversify their portfolios.
When Is The Nairobi Stock Exchange Open?
The Nairobi Stock Exchange opens for five and a half hours, Monday to Friday. It opens from 09:30 to 15:00 East African Time (GMT+3).
What Is The Best Stock To Buy On The Nairobi Stock Exchange?
There is no simple answer as to what the best stock to buy on the Nairobi Stock Exchange is. The top five companies listed usually have the highest trading volume and liquidity, so these could be a good place to start.
Is The Nairobi Stock Exchange Open Today?
The Nairobi Stock Exchange closes on nine weekdays each year. It is always closed on weekends. Check our calendar above to see whether it is open today.