Stock Market In Kenya: Introduction To NSE

The Nairobi Securities Exchange (NSE) is Kenya’s main stock exchange. Established in 1954, it’s one of Africa’s largest securities exchanges. It’s located in Nairobi, Kenya’s capital, and lets people trade shares, bonds, Real Estate Investment Trusts (REITs), and other financial stuff. The NSE is regulated by rules set by the Capital Markets Authority of Kenya (CMA).

Here’s a step-by-step guide to buying shares on the Nairobi Securities Exchange:

1. Finding a Licensed Stockbroker: Get an account with a licensed stockbroker or an investment bank that works with the NSE. I used AIB-AXYS AFRICA, which has an online platform and a mobile app for trading.
2. Open a CDS Account: This account holds your shares electronically. Your broker will help set it up, and you’ll need some ID and other papers for that.
3. Research: Before investing, look into the companies listed on the NSE. Check their performance, dividends, market standing, and future plans. Doing this homework is crucial.
4. Fund Your Account: Put money into your brokerage account. The amount depends on what shares you want and the minimum investment required. I used electronic funds transfers (EFTs) for this, but you can also use MPesa.
5. Place an Order: Once your account has money, you can buy shares. You can either say the price you’re willing to pay (limit order) or buy at the current price (market order).
6. Settlement: The NSE takes three days after the transaction date (T+3) to transfer your shares to your CDS account and finalize payment.
7. Keep Records: Save all transaction receipts and messages for future reference.
8. Start Small: If you’re new, try companies you understand or ETFs that track the whole index. Usually, you need to buy at least 100 shares.
9. Dollar-Cost Averaging: Regularly invest a fixed amount regardless of share prices. This helps manage market ups and downs.

Here are some potentially undervalued stocks on the NSE:

1. ABSA Bank Kenya (ABSA): Trading at KES 11.85, it offers various banking services.
2. Co-operative Bank (COOP): Also at KES 11.85, it provides banking and investment services.
3. Equity Group (EQT): Trading at KES 35.95, it serves individuals and businesses in several countries.
4. KCB Group (KCB): At KES 20.90, it provides banking services across East Africa.
5. East African Breweries Limited (EABL): At KES 129.25, it’s in the beverage business.
6. Safaricom Plc (SCOM): Trading at KES 14.60, it offers telecommunication services.
7. Bamburi Cement (BAMB): Currently trading at KES 25.1, it’s in the cement industry.

Generally, there are good investment opportunities in Kenya’s businesses. Many share prices are down due to the struggling economy, presenting opportunities for savvy investors. Investing in shares can pay off in the long run, but it’s wise to consult a financial advisor before making the big more.

Frequently Asked Questions

1. Which is the best stock to buy in Kenya?
The “best” stock to buy can vary based on individual financial goals, risk tolerance, and market conditions. It’s essential to research and consider factors like the company’s performance, financial health, industry trends, and future outlook before deciding. Some popular stocks in Kenya include Safaricom, Equity Group, KCB Group, and East African Breweries Limited (EABL) ABSA Bank Kenya, Co-operative Bank, and Bamburi cement are among the top most recommendable shares to buy.

2. How do I invest in stocks in Kenya?
To invest in stocks in Kenya, you’ll typically follow these steps:

• Open a brokerage account with a licensed stockbroker or investment bank.
• Fund your brokerage account with the amount you want to invest.
• Research and choose the stocks you want to buy.
• Place an order through your brokerage account, specifying the quantity and price (if applicable).
• Monitor your investments regularly and consider consulting with a financial advisor for guidance.

3. How much is a share in Kenya?
Share prices depending on the company, market conditions, and demand. Share prices can range from a few Kenyan Shillings to thousands of Shillings per share.

4. How much is Safaricom shares?
As of April 2024,, Safaricom shares were trading at approximately KES 16.50 per share. Share prices can fluctuate based on market conditions.

5. How much do I need to buy shares in Safaricom?
The amount you need to buy shares in Safaricom depends on the current share price and the number of shares you wish to purchase. For example, if Safaricom shares are trading at KES 16.50, and you want to buy 1000 share, you would need to invest KES 16500.

6. Is buying Safaricom shares profitable?
Past performance is not indicative of future results, but historically, Safaricom has been a profitable investment for many shareholders. However, the profitability of buying Safaricom shares depends on various factors, including market conditions, company performance, and individual investment strategies.

7. Is KCB bank a stockbroker?
KCB Bank is primarily a commercial bank that provides banking and financial services. While they may offer investment services like buying and selling securities, they are not exclusively a stockbroker. Investors typically use licensed stockbrokers or investment banks to trade stocks on the Nairobi Securities Exchange (NSE).

8. How to do stocks for beginners?
For beginners looking to invest in stocks:

• Educate yourself about the stock market, investment basics, and risk management.
• Open a brokerage account with a reputable and licensed stockbroker.
• Start with small investments and diversify your portfolio.
• Research and analyze companies before buying their stocks.
• Consider long-term investment strategies and consult with financial experts for guidance and advice.