FAQ's

• 1. What products are traded at the Nairobi Securities Exchange?

  • The products traded at the NSE are Shares and Bonds. Shares and Bonds are money or financial products. Another name for Shares is Equities, while Bonds are also known as Debt Instruments. Products traded at the

• 2. What is different the difference between a stock market and any other market?

  • The main difference about the Stock Exchange market from other local markets is in the types of products traded, how they are traded and how they are paid for and transferred.

• 3. What is the NSE?

  • The Nairobi Securities Exchange is a Market, and commonly known as the NSE.

• 4. What is the importance of this market to the economy?

  • For an economy to grow, money needs to shift from les to more productive activities. In other words, idle money and savings should be invested in productive activity for the economy to grow. The Nairobi Stock Exchange makes this possible by:

     

    Enabling idle money and savings to become productive by bringing the borrowers and lenders of money together at a low cost. The lenders (all savers) become the investors. They lend/invest and expect a profit/financial reward. The borrowers also known as issuers in the markets borrow and promise to pay the lenders a profit. We therefore encourage savings and investments.

     

    Educating the public about the higher profits in shares and bonds; how to buy and sell; when and why to buy and sell. We also educate the public on how to invest together as a group.

     

    Facilitating good management of companies by asking them to give periodic reports of their performance.

     

    Providing a daily market reports and price list to ensure that investors know the worth of their assets at all times.

     

    Providing financial solutions to common problems. Shares and bonds are accepted guarantees for Co-operative Society’s and bank loans. Shares and bonds can be planned, with the help of a money manager, to pay for school fees, medical, car and other insurance schemes, pension or retirement plans etc.

     

    Through shares and bonds, the government, small and big companies, cooperatives societies and other organizations can raise money to expand their business activities, make a profit, create employment and generally help the economy to grow.

     

     

     

• 5. How is the NSE market organized?

  • Market days.

    The market is open Monday to Friday from 8.00 a.m. to 5.00 p.m. trading activities start at 9.00 a.m. and continues until 3.00 p.m. Members of the public can view the market from the public gallery at any time while the market is open. The market is closed during public holidays.

     

    Display of Shares

    Shares are grouped into 4 sectors namely Agriculture, Commercial and Services, Financial and Industrial & Allied sectors. The shares are displayed in alphabetical order in each group for easy location by investors viewing trading from the public gallery.

     

    Display of Bonds

    Bonds are in two groups namely: Treasury Bonds – issued by the government; and Corporate Bonds – issued by companies.

     

    They are displayed as and when the government or a company issues one.

• 6. What Amounts Can an Investor Buy?

  • An investor can buy as little or as much as he or she can afford. It is also possible to invest very little money in groups of small investors pooled together by money managers in the market.

     

    Minimum number of shares.

    Share are bundled in minimum lots of 100 shares and above in the main market boards. Fewer shares that 100 are available on the odd lots board.

     

    Minimum number of Bonds.

    Bonds are sold in minimum bundles of KShs. 50,000.00. Small investors can pool their money together and buy a bond with the help of a money manager.

• 7. what is a Public Gallery?

  • This is a special place from where investors and members of the public view live trading as it takes place. All members of the public are welcome.

• 8. Delivery & Settlement

  • This is where share accounts and bond accounts are transferred from one investor to another and payments completed. It is also here that shares and bonds of deceased persons are transferred to beneficiaries at a small administrative fee.

• 9. Information Centre

  • Here, investors and members of the public get answers to their questions about the stock exchange. An individual or group can also register to attend a educational session organized by the Nairobi Securities Exchange every Wednesday. The NSE also gives lectures to groups in their own premises through invitation. There are other operational structures in the market which include Market Research and Development, Compliance, Legal, Accounting and Administration.

• 10. Our History

  • This market was started in the 1920’s by the British as an informal market for Europeans only. In 1954, the market was formalized through incorporation into a company.

    In 1963, Africans were allowed to join and trade in the market. For many years, the market operated through the telephone with a weekly meeting at the Stanley Hotel. In 1991, this market mover to IPS building and was opened to the public. In 1994, the market moved to its current location, on the 1^st Floor of the Nation Centre, with the introduction of the Central Depository and Settlement Corporation (CDSC) investors will open share and bond accounts, in electronic accounts similar to their bank accounts. Buying and selling of shares and bonds will be made much easier and quicker. All the benefits of shares and bonds will remain the same. For example, an investor will still be able to use a Share Account or Bond Account as a guarantor for a Co-operative loan or as collateral for a bank loan.

• 11. More About Us.

  • More information about the NSE can be found at the Nairobi Securities Exchange  information centre; website: www.nse.co.ke; Handbook; NSE Annual Report; Brochures; public Education Sessions; Newspapers; Television and Radio. You can also speak to Stockbrokers; Money Managers; Browse Company Annual Reports and Accounts and talk to other investors in the market.

• 12. WHAT IS A SHARE?

  • A share is a piece of ownership of a company or enterprise. When you buy a share, you become an investor and thereby an owner of a piece of the company’s profit or losses.

• 13. Why do companies sell shares?

  • Companies sell shares to raise  (borrow) money from members of the public to expand their business activities in order to make more profits. They invite members of the public to buy shares and by so doing have a say in the running of the company as lenders of money and owners.

    Shareholders expect a profit as a reward from lending their money to expand the business of the company.

• 14. Who is a shareholder?

  • A shareholder is an investor who buys shares with an expectation of profit. Profits in shares are through dividends, gains in share prices, bonuses, rights etc.

     

    A shareholder owns a piece of the company and its profits equal to the number of shares he/she owns.

• 15. What are the benefits of owning shares?
  • • A source of profits;
    • A guarantor for borrowing loans from Cooperative Societies and Banks;
    • A way of saving your money for the future;
    • An easy and quick asset to buy and sell;
    • A new business activity that is beneficial in many ways. An investor can trade in other markets trade in maize, bananas, potatoes, tomatoes, onions, mangos etc.
    • Buying at low prices and selling at high prices to make a profit;
    • A solution that increases financial activity and economic growth.
• 16. What are the qualities of a good share?
  • • Frequent and generous dividends
    • The company is managed productively, transparently and is accountable to shareholders
    • No wastage in the use of resources
    • Respect of shareholders and their opinions
    • Shares that are easy to buy and sell quickly in the market
    • The company abides by the rules, regulations and laws
• 17. What is a Bond?

  • A bond is a loan between a borrower and a lender. The borrower promises to pay the lender some interest quarterly or semi-annually at some date in the future. The borrower also promised to repay the initial money invested by the lender. The lender lends and expects to make a profit. The profit from a bond is gained in the form of an interest. At the moment some bonds in the market have an interest rate of 14%, 12%, 10%,8% depending on the type of bond it is, and when it was issued.

• 18. I OWE YOU.

  • At the Nairobi Securities Exchange, the lender is called an investor and the borrower the issuer.

• 19. Who can Buy Bonds?

  • Any individual, Co-operative Society, Women Group, Kiama, Youth Club, Church, School, College, University, Investment Group, Insurance Company, Bank, Pension Scheme, and many other can buy bonds.

• 20. Can a Bond be sold before Maturity?

  • Yes. In times of need or emergencies, an investor can sell his or her bond easily and quickly in the market. The interest on a bond grows on a daily basis and so a bond has new value and price every day. An investor can therefore buy or sell a bond on any day of his or her choice. There are no penalties for selling a bond before the maturity date.

     

    For example, an investor can buy a bond of 5 years and expect an interest of 12%. The interest is paid after every 3 or 6 months. Such an investor can sell the bond at any time of his or her choice at the current market price. The market price of a bond will depend on the number of other willing sellers and buyers in the market on that particular day. When there are many sellers in any market, prices go down and vice versa.

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