Nairobi bourse turnover dips despite launch of day trading
Lack of volatility in the market and low investor education has caused a low uptake of the day trading opportunities at the Nairobi Securities Exchange (NSE), traders have said.
Market turnover suffered this week despite the launch of day trading which was expected to boost liquidity and activities in the market.
“We have not seen much orders from our end here at Suntra since Monday, but we expect activities to build up later on,” said Michael Mwakio, a trader at Suntra Investment Bank. Mwakio said he expects Day Trading to work better, especially when banks announce their results early next year ahead of dividend payout. “Day trading works well when there is volatility in the market such that traders take advantage of price movements, but at the moment the market is very slow,” he added.
Day trading went live on Monday this week but there were minimal activities which traders attributed to low knowledge of how to use the product.
“Eventhough day trading was launched on Monday, we saw more activities on Wednesday of November 22, however it will take sometime for people to adapt,” said Ann Wacera, an analyst at Cytonn Investments.
The NSE earlier this month received an approval by the Capital Markets Authority to commence day trading in a bid to boost liquidity.
“The Nairobi Securities Exchange has received an approval from the Capital Markets Authority to initiate day trading. The rollout of day trading will go live on November 22, 2021 as part of NSE’s strategy to enhance market liquidity,” NSE said in a press statement. The NSE said that day traders will receive a discount in terms of reduced fees which are normally levied during the transactions.
“To complement this milestone, the NSE board has approved an incentive structure whereby investors who participate in day trades will receive a discount on the second leg of the transaction which will be levied at 0.114percent compared to normal trades which are levied at 0.12 percent,” the NSE said. The NSE said this milestone has been helped by its investment in technology in 2019 that enabled the separation and post trading activities.