Back in June, we looked at ways to invest on the Johannesburg Stock Exchange through US discount brokers. Some intrepid readers may now be wondering how to buy shares on Africa’s smaller stock markets.
Samuel Gichohi is a Senior Research Analyst at NIC Securities, a division of Kenya’s NIC Bank (NICB:KN). He generously agreed to help us navigate the process of opening a Kenyan brokerage account and to share his views on the best bargains currently on offer at the Nairobi Stock Exchange.
The Nairobi Stock Exchange hasn’t been a great performer the past few years. Why should investors be investing in Kenya now?
Samuel Gichohi: The Nairobi Stock Exchange (NSE) is currently a buyer’s market which presents foreign investors with massive bargain opportunities. This situation is a result of various factors that have converged to push stock prices to levels that are out of whack with the fundamentals on the ground.
These factors include a weakening currency (which has finally begun to stabilize), escalating fuel prices, a surge in local liquidity prompted by heavy bank lending to the private sector, and food inflation caused by the region’s persistent drought. The situation was further compounded by increased political uncertainty due to the MENA crisis and the trials at the Hague of individuals suspected of instigating violence in Kenya following the 2007 election.
As a result, despite healthy turnover levels, stock prices have suffered over the last six months. Only 13 out of 48 active stocks trade above their year-end levels.
But financial results for the 2010 fiscal year indicate that listed firms — especially the financial sector companies – enjoyed explosive bottom line growth. This trend continued in the first and second quarter of this year, which indicates that economic growth is still on course.
Considering that a majority of stocks currently trade at P/E ratios below their respective sector P/E ratios, and that 15 of the 29 largest-cap companies offer dividend yields above 3%, there is an obvious mismatch between stock prices and company fundamentals. This is bound to correct going forward.
In my view, the NSE is an ideal frontier market. It offers foreign investors exposure to the Kenyan economy, and — because many listed firms have expanded beyond Kenya’s borders — it also serves as an entry point to the regional economy. In the short term, foreign investors can capitalize by investing in the weak shilling and seek exit points as it strengthens against the US dollar.
Let’s suppose I am a US-based investor and want to buy shares of a Kenyan stock. How would I do so? Can you walk me through the account-opening process?
SG: The investor would need to open an account with a local stockbroker who will in turn open a Central Depository and Settlement Corporation (CDSC) account for them. The CDSC account is where all tradable shares are held electronically.
Account opening forms are typically available on stockbrokers’ websites. The potential investor would first fill the forms and attach scanned copies of a recent passport-size photo, a certified copy of their driver’s license or passport, and a certified copy of a tax return or utility bill. After the broker receives the documentation the investor’s account will be activated and details will be communicated to them within one business day. At NIC, we suggest that the documents be scanned and emailed to us. The originals can follow later.
How would I, as a US-based investor, place a buy or sell order through NIC Securities? Do I just send you an email?
SG: If the investor would like to place buy and sell orders by email, they can complete the email indemnity form and submit a one-off processing fee of KES200 (USD 2.30).
Otherwise, the investor can communicate their order to us and arrangements can be made to accommodate them as long as adequate security measures to facilitate proper identification are in place.
What expenses are incurred when trading Kenyan stocks? Can you give me a breakdown of the commission and fees?
SG: The Capital Markets Authority (CMA) regulated commissions for trades below KES100,000 (USD1,111) is 2.1% and 1.85% for trades above that amount. At NIC, lower commissions are negotiable depending on deal sizes.
Do most Kenyan brokers have minimum amounts required to open a trading account? To place a trade?
SG: At NIC Securities, opening a CDSC account is free and the minimum trade size is 100 shares of any counter. We, however, pride ourselves on having the capacity to handle very large trade sizes with very low turnaround times.
How are dividends delivered to foreign investors? Can they be deposited into my trading account?
SG: Dividends cannot be deposited into a trading account. This is a market regulation. However, dividends can be deposited directly into the client’s bank account and arrangements can be made to reinvest the funds from there.
Must an investor have a Kenyan bank account to collect dividends? Or can they be wired to a US bank account?
SG: When opening a CDSC account the investor is required to indicate their dividend disposal preference which could also be to have the money wired to their foreign account. The concern for the investor would be that they would have to bear the cost for the electronic funds transfer. Having a local holding account to allow the dividends to accumulate before being wired to the foreign account would be a good idea. Most local banks have dollar denominated accounts and these can also be used to hold the dividends to take advantage of currency fluctuations.
What sort of account reporting can an investor expect to receive? Do brokers send a monthly statement of my cash and stock holdings?
SG: Brokers provide periodic and ‘on demand’ statements which show the securities that an investor holds with that particular broker at any point in time. Total portfolio holdings (which can be held through more than one broker) will be sent via email to the investor by the CDSC every six months for dormant accounts, and at the end of any month in which there is any trading activity on the account.
A couple Kenyan stockbrokers failed recently, are there now safeguards in place to protect investors and prevent similar events from happening again?
SG: A number of market reforms have taken place recently in an effort to protect investors’ funds. They have resulted in the introduction of an automated trading system, more stringent capitalization and disclosure requirements, the adoption of a standard stockbrokerage platform, and the eventual demutualization of the NSE.
The minimum capitalization requirement has resulted in most of the smaller brokerage firms being acquired by banks. Investment banks which have not reached the KES250 Million capital threshold have been relegated to stock brokerage status, which requires a minimum capitalization of KES50 million.
The government plans to increase the investor compensation fund and investors are being educated on how to identify and report fraudulent behavior.
What is your favorite Kenyan stock right now?
SG: I have three favorites.
First is Scangroup (SCAN:KN). It is East Africa’s largest advertising holding company with an 80% market share. It faces no local competition, which enhances its ability to attract and retain the region’s best talent. Being a listed company means it can also retain its top employees through stock options. In a human-capital intensive field such as advertising, this is extremely important.
The company’s 2010 results were affected by costs related to its acquisition of Ogilvy East Africa, a former competitor. We expect the merger to result in cost advantages going forward. We’re also bullish on the company because competition in East Africa’s banking and telecoms industries is heating up. This will ensure higher ad-spends and thus more revenues for Scangroup. We expect annual profit growth north of 20% this year. It currently sells at a PE of 20, but we consider it undervalued because of growth opportunities.
My second pick is Equity Bank (EQBNK:KN). It is the fastest-growing bank in Kenya and boasts a market share of deposits that has grown from 1.7% in 2005 to 6.2% in 2009. The deposit growth has been driven by branch expansion — particularly in Kenya’s rural areas – and by mobile phone banking.
Equity Bank caters primarily to the SME and lower income segment with most loans being below KES100,000.
This “banking the unbanked” model has yielded impressive results, evidenced by deposit growth of 44% during the first half of this year.
Equity has also done an admirable job at containing costs and maintaining the quality of its loan book. Both of these factors should lead to improved margins.
Finally, for the income investor, I like KenolKobil (KNOC:KN), a downstream oil marketer with a skillful and motivated management team. The company is focused on growing its storage capacity and distributional efficiencies, which is imperative for survival in the Sub-Saharan African fuel-marketing industry. As competition increases and margins decline, the company will be able to take advantage of its scale economies.
I also like that it is well diversified both geographically and in terms of its product range. The company has a heavy presence with over 400 service stations in East and Central Africa as well as Southern Africa.
All this is backed by the additional effect of increasing property prices that could lead to significant profits when the company disposes of some of its non-core assets.
The company is currently selling at a historical P/E of 10 and a half-year dividend yield of 5%. At the current price, the full year dividend yield will be approximately 10%; with profit growth, and a dividend pay-out ratio of 40-45%, the company is a cash cow.
Do you have questions on how to invest on the Nairobi Stock Exchange? If you do, share them in the comments.
Further Reading:
How to Invest on the Zimbabwe Stock Exchange
How to Invest on the Nigerian Stock Exchange
as a minor how can i invest and get assured that my earnings wont be affected by any losses and which companies can accept me as a minor?
Hi Jalas
Thanks for your query.
As a minor you can invest on the NSE just like any other investor. Your parents or guardians will however be required to initiate any activity on the account until you reach the age of 19 years. the account will be opened as a joint account between the minor and the parent/guardian. the minor will be required to provide a birth certificate and passport photo while the parent/guardian will be required to meet all the KYC requirements by providing Certified copies of Passport/ID, Pin Certificate, Utility bill and Photo. they will also be required to sign the GTC and email indemnity forms to facilitate account opening and transactions.
What is your take on Olympia Capital Holdings (OCH). It looks pretty cheap at Ksh. 3. I was thinking that since the housing market is at its peak, they might be selling lots of tiles.
Where is the CDSC office in Mombasa, Kenya?
Am 22yrs from nigeria. Can I start investing in kenya? Is it risky for me?
Hi, I am a Nigerian. What are the guidelines and requirements to invest on the Kenyan stock exchange for a foreigner, and what is the minimum amount required to invest?
hi samuel do you have a tweeter account where i can follow you and exchange ideas
why do you think safcomm returns were sooo minimal long before the price wars went down??? how do i as an investor foresee such happenings…
Hello,am interested in investing in stocks but I want to acquire as much knowledge as possible. Could you offer me some tips no matter how basic they are?
Hallo
Very important information up there. I am a kenyan native currently living in Germany and i am planning to start investing in the kenyan stock market next year. I am not experienced in these matters and i want to start investing from a small amount as i learn how the market operates. Would you please advice me on how to go about it as a beginner?
Thanks in advance.
Hi Kate,
The diaspora investment platform homestrings.com sounds ideal for you – have you heard of it? All investment opportunities are clearly set out with their own fact sheet, allowing you to understand the impacts, risks and nature of the investment. Minimum investments can be as low as US$1000.
There is also a helpful article here about how to get started: https://www.facebook.com/notes/homestrings/investing-back-home-where-to-start/397302020358518
thanks alot Sarah. I havent visited the page for a while now. I will check the info.
Hey Kate, Have you started investing yet? I am ready to start but would be glad to get tips as I am from Germany as well. Thanks
hey Chero, i actually started last year but still getting more info and screening companies.
How far have you gone?
HOW CAN A NON KENYAN INVEST IN THE KENYAN SME SECTOR?
The SME sector in Kenya is huge.Do you know specifically what you want to invest in?
m from nigeria,can I invest in kenya stock now?our much is the capital to invest?I need competent stock brokers.
Hallo
I live in Nairobi.Please assist me on how i can invest in the Nairobi stock Exchange in a way am assured of making a profit out of it.
Well explained Samuel.Interesting to discover this site today.I can’t believe Zimbabwe did that well.Am a Kenyan and a resident in Nairobi with knowledge on the Nairobi Securities Exchange which is the only stock exchange in Kenya.
am a Kenyan and wish to start investing. But I have minimal knowledge on the requirements, opening an account, which companies to buy shares. I would wish to start by making a small investment as I gradually learn how it works.
kindly assist me
Hi! I am grateful for this info! I opened a CDS account through one of those firms that failed, What do I need to do to change my info with CBK! Can I use another broker?
Hi Sade,
It is possible to use another broker to access your original CDSC account.
These accounts are structured such that they are all maintained by a central (government) body, regardless of your stockbroker. As such, even if a broker’s firm collapses, your wealth is still safe.
Speak to your broker of choice, and they should be able to guide you through the transfer process.
hi SG ,Is a utility bill mandatory?and please advice on the best way to choose a broker ,which is your choice of brokerage firms??
Hi please can you offer us a comprehensive procedure needed to invest in NSE when you are a kenyan.I have seen the above but seem like for foreigners
kindly send me tips on how to invest as a kenyan as well..I would be interested in investing
Hi, Kaku. You’ll be happy to know that the process is essentially the same for Kenyans. Like foreign investors, you will need a CDSC account and to fill out any required paperwork from the stockbroker. Simply phone or email your broker of choice and ask them for information regarding opening a trading account.
Happy investing!
Ryan
Thanks for a great article. For retail and small investors such as myself the NSE can be intimidating. Once registered the investor needs to constantly liaise with their stock broker and keep themselves up to date on market trends.
The Kenyan market is highly speculative, however. As a buyer of small means, I prefer to buy low value shares that offer high dividends and hold on to the shares until i can offload at a respectable profit.
I also always reinvest the dividends thus growing the portfolio without dipping into my funds. As of July 2012 it’s a buyers market, however trading is always a gamble so beware of the risks.
That’s great advice, Leah. Many thanks for stopping by!
Dear Samuel,
How much does one need to have before investing in NSE or to buy any shares in Kenya.
Please advise on this.
Hi Reuben,
I’ll fill in on this just in case Samuel doesn’t see your question.
The minimum amount required to open an account varies from broker to broker, but NIC does not require any minimum amount. They do, however, require a minimum trade amount of 100 shares. Therefore, if you were to hypothetically purchase 100 shares of Safaricom you would need roughly Ksh400 to complete the trade.
I would urge you not to invest any money that you will require in the next five years. Investing in stocks entails a high degree of risk and there is no guarantee of a positive return.
Happy investing!
That is a good advise Ryan and looking forward to learning more from you about investment in the stock exchange. What of the Kenya Airways shares?
One of the world’s greatest investors, Warren Buffett, once said, “How do you become a millionaire? Make a billion dollars and then buy an airline.” Airlines are expensive businesses to run and they are subject to substantial competition meaning profits tend to be ephemeral. I’m tempted by airline stocks often, but I usually manage to resist them.
This is so AMAIZING!!!! Ryan Big thanks.
Thank you for that advise and it came to pass. Still shopping around
for good stock to invest in.
Your feedback to the questions is captivating.
Thank you, Annitah. Glad you’re finding the site helpful!
Hi Ryan, which Kenyan stockbroker would you recommend for a small retail investor planning to invest under KES. 50,000? I prefer a company that specializes on offering the best services to the “small guys” 🙂
Hi Ryan,
At least i have learnt one or two things.
What are the best shares to invest in today’s Kenyan market? Plus, are there brokers out there who take advantage of those investors who do not watch the market on a regular basis and go ahead and use their “customers” investment to benefit themselves? If there are such individuals, what should an investor in shares do to ensure that all goes well with his/her investments?
I am a Kenyan who wants to invest but i dont know where to start from. I would like to be told the safe steps to follow to invest in stocks.
@Wycliffe it is impossible to trade without watching the market regularly unless you have a portfolio manager doing that for you. It pays to have a broker who has your interest because they are on the floor and can easily capture the highest high and lowest low if you get my drift. Speaking as a novice investor; if speculating, I think it best to buy into the stocks moving huge volumes eg KCB and Safcom, this is because their prices are constantly shifting up and down, thus opportunity to make small gains (or losses) frequently. Talk to your broker regarding performance within specified time frames eg stock x is at y where is it estimated to be in 1 to3 months, they always have this kind of info and can give you weekly updates.
I am sure there could be loopholes allowing brokers to use clients funds to buy and sell but this is probably not done often, your stock brokerage firm should have a system that alerts you when your shares are moved eg I get an automated email everytime my shares are moved regardles of whether my broker communicates to me or not. Plus your CDSC statement at the end of every month also has a record of transaction. At the end of the day trading requires an element of trust since you are putting your money in someone elses hands, so, find a good firm and be resigned to the fact that brokers will make money everytme there is a transaction.
hi Leah I find you well acquainted with shares trading and would ask you to give me a list of stock brockers who can guide me when to buy and sell and they are ready to work closely with a client
Do you think I can trade directly from the NSE as an individual, I mean buying & selling my shares at my disposal?
If so, what is the threshold shares or amount should I have?
Can an individual be a broker of his own-I mean buy large volumes of shares and sell on his behalf without having to undergo another person/body/broker/institution?
Hi Musyoka,
Indeed, you can trade on the NSE as an individual. You will, however, need to open an account with a Kenyan stockbroker. You can find a list of these brokers here.
Happy investing!
Thank you for the information
Quite welcome, Dorothy!
You can open an internet account with online brokerage firms like scottrade, TD-Ameritrade, etc. You can buy whenever you want, and as many shares as you want. There are about 5 trading platforms in the U.S. that include: NYSE, NASDAQ, AMEX OTC, and Pinksheets.
That’s true, Edward. Unfortunately, I’m not aware of any US brokers that trade on the Nairobi Securities Exchange.
Like the article. It’s very educative, but I am concerned with the locals the need to be encouraged to invest in the sector. Government’s always looking for foreign investors, ignoring the local business men. I have talked to people in Kenya who think the whole thing is just “government officials trying to steal our money.” Why not work to change their minds. After the Safaricom share saga nobody wants to hear about stocks.
@Leah Great insight, would love to hear more from you.
I see a lot questions from people wanting to start investing and wondering how to go about it; I think first you need to decide what sort of investor you want to be i.e. a)Defensive/passive or b) enterprising/active. In simple terms you need to decide whether or not you have capacity and can put considerable effort (e.g. at least 6 hours a week) and intelligence to the task. This decision would be reflected in how you divide up your portfolio between shares and say, cash or bonds etc… Defensive investors use conservative methods, go for important, big, financially robust and entrenched companies… Enterprising investors are virtually free to search for value wherever they can find it and use more aggressive methods. Naturally the enterprising investor requires a higher return for his intelligent effort. Read Intelligent Investor for more on this perspective on investing.
Then you simply need to understand the businesses you invest in and treat your operations for profit as a traditional businessman would – be sure of a profit before you go in absent promises or prospects and this goes to the price you pay. Research as much you can about the business, management, competitors, customers, etc looking for items that may impair future business, competitive advantages, etc.
I would personally discourage non-professionals from selecting individual companies and instead focus on group buys e.g. look for say 15-30 companies selling for less than their working capital net of total liabilities with conservative capital structures and of stable character. Alternatively, just go for high dividend yield and high asset backing for the shares.
Excellent comment, Ray. If you’re going to invest heavily in individual stocks, take the time to get to know that company’s operations intimately. If you are unable to commit the time and energy to this, it is best to diversify across a large number of stocks (preferably through an index fund) and hold them for the long-term.
I just opened my CDSC account last month with equity bank online and must say your article and the comments thread along it has been of greatest help and encouragement .
I started with a little capital and I can see myself putting more funds in the near future into the whole business.Currently am trading “penny stock” and am doing good.Tomorrow 29th Monday June 2015 am offloading Mumias sugar shares hoping it will be not less than Ksh.2.5/share ,I bought the shares at 1.65 /share earlier in the month. for 12800 shares ,I would have made some good cash there.Thanks for your article.
Glad to hear it, Smada! Congrats on the Mumias gain. Be careful with penny stocks, however, as they can also move quickly in the wrong direction.
How was the account opening process at Equity Bank Online? Would you recommend them to other investors?
Who are the best stock brokers in Kenya? Thanks
Investing in an index fund would be a great idea. Try to find one that is low cost and one that people that manage money find difficult to beat. Also try to avoid getting in during speculative highs as determined by professionals – they know when the market is high or too high, they just cant keep out of the speculation. One way to determine highs and lows of the market is to check the opportunity cost of investing in stocks vs bonds using yields.
Hi Ryan,
I’m an Ethiopian interested in investing on the NSE. I’m currently working outside Ethiopia, and I’m not required to pay tax on my salary. How can I get a “certified copy of a tax return or utility bill”? I do have a passport and Kenyan drivers license.
Thanks.
Hi Adane,
It sounds like the broker will accept a certified or notarized copy of an electric or water bill in lieu of a tax return.
All the best!
Thank you Ryan.
My pleasure, Adane. Let us know how your investment works out.
Great advice on this site. Am investing at the NSE mainly for two reasons, and one is obviously to get value or profit from my investment, secondly to increase my knowledge about stock markets and all the procedures involved. You can perfectly learn the game if you are a player yourself. So I’ll be ready, as i have been doing on other fields, to share all the knowledge that i will gain as an investor and student at the stock markets. Join me on twitter and let’s exchange ideas there and mutually learn from each other. Twitter @NyamwangeO
Great to have you here, Nyamwange!
Hey Ryan! I want to invest on the Nairobi Stock Exchange, but i don’t know exactly where to begin. Kindly, I would like you to advise on the safe steps to follow. Thank you.
Hi, Pickston! Thanks for your comment. You might be interested in this article. It points out a few things to consider before you decide to begin investing.
Your next step will be to find a broker. Look for more advice for beginning investors here in coming months.
Where is your office in Nairobi, please?
Hi, I’m a 21 year old student and looking to invest roughly 10,000 shillings. I have saved over a few months. How would you advise someone my age to invest?Should I look at short-term investment/trading or consider a more long term investment? And where should I put my money?
Hey,
I’m also a 20-year-old student, and I’ve been saving up and have roughly the same amount you have but want to make more.
If you had invested the 10,000 shilling in a stock like Eveready in February(when you posted this) when it had a low of 1.8 and sold it in the month of June when it had a high of 3.15, the return before charges would have been 17,500. the total of the 2% brokerage charge for buying and selling amounts to (200+350)550. So your total return would have been 16950.
how can i start investing with you and by how mach
I have a question. I am a business owner who would love to invest on the Nairobi Stock Exchange. I need guidance on forms etc. How do I get started, and where can I obtain these forms?
Hi Bea, The first thing you will need to do is contact a stockbroker. The broker will then guide you through the process of filling out and submitting the necessary paperwork. Good luck and let us know how it goes!
I want to invest in shares. Please advise.
Hi Edwin,
From your short post, it is difficult to establish the exact issue on which you would like to receive advice.
Generally though, trading on the stock market involves high risk and potentially high returns. A trader with the right information and analysis is likely to perform better than another who gambles his way about the market.
One’s portfolio size, willingness and ability to take risks, liquidity, time horizon and other circumstances will also play a role in determining one’s optimal mix of shares.
Write to Ashanti Research (you can find our contacts online via a Google search) and we would be happy to give advice, or even better, set up a stock portfolio up for you.
Mr livigu share trading is adouble edged sword or fire it can hurt or help you the trick is always to gather inteligence before investing also learn to exit and enter at the right moment. statistics like daily turnover, total demand and supply should be in your mind finally no one get experience free of charge take risk but calculated one.
Hi Ryan, I’m Kenyan and looking to get some advice on how to read the market when it comes to short term investments. How do you make a good decision or rather what are the factors to look at or for when investing in the stock exchange?
Hi Murage,
I find short-term investing extremely difficult because of the stock market’s volatility. It’s nearly impossible to predict with any degree of consistency whether a given stock will be up or down over a period of a week or two.
That’s why I tend to look for good companies trading at a fair price and hold on to them for a year or more. This gives the management of the business enough time to execute on their strategy and for the market to recognize their success (or failure).
How do you spot a company trading at a fair price? One rule of thumb is to look at a companies annualized earnings growth rate over the past five years. If this rate is higher than the stock’s P/E ratio, you may have identified a bargain. But don’t stop there. Research the company further. What’s the reason it might be trading so cheaply? If you can’t find a reason and you feel like you understand how the business operates, buy the stock and give it some time to run.
Happy investing!
Ryan
Hello, Ryan. I can see you give good stock exchange tips. Do you happen to know which companies will show good sales this fall? Or should I ask my broker? I would like to know from real clients who are spending their money and who have had success. Is investing for a 5-year period something that someone can rely on or is it a matter of gambling with the period? I’d like to know more about how these things work. I have invested in some shares right now, and I am just not sure what if I should be looking to buy something else.
Regards,
Adhis
Hi Ryan,
Just curious if you knew whether dividends can be automatically reinvested in those respective stock holdings rather than having to get paid out into a checking account or wired to a foreign bank account?
Thanks!
Jody
Hi There-
Is there much institutional buy on KSE ?
Also, would there be a need for direct market access from say US Brokers to trade on KSE ?
Hi Matt,
There’s growing foreign institutional participation on the exchange, but the market remains pretty small. Weekly trade volume averages $33 million.
Would be great to have direct market access from a US broker, but I’m not sure how much trade volume would be necessary to make it worthwhile to offer such a service.
Hi, I am a student who is interested in investing in shares but I have little knowledge about it. How can I gain more information to enable me to survive in the stock market?
Hi Makeer,
Nice to have you stop by. Here’s a little story to read that helps explain what a stock is. Give it a read and if you have any questions don’t hesitate to post them in the comments.
https://investinginafrica.net/2013/02/what-is-a-stock/
All the best,
Ryan
The post was nice but I really struggled to read through. Can you use a more distinguishing font color?
I want to start investing in the stock exchange. What precautions should I take?
That’s great to hear, Jack. First, you will want to make sure that you invest only money that you do not need for the next five years or so. Before investing in the market, save up an emergency fund that can cover six months of living expenses in case you lose your job or have an unforeseen expense like a medical bill. Then pay off any high-interest debts you may owe.
When you have done all this, then you can consider investing in the market. Find a reputable broker, like the ones listed in this article, and open an account. After that, invest only in companies that you know and understand. Buy them at good prices and hold on to them until the prices look expensive.
Hope this helps get you started!
All the best to you,
Ryan
Ryan,
Would you be kind enough to list/recommend some of the more reputable brokers in the NSE, preferably those who support online access and those with timely responses to customer inquiries. I think if the NSE actively encouraged the stockbrokers to engage the diaspora community the weekly trading volumes could be improved tremendously not to mention the capital that would be available to the listed companies. A lot more definitely needs to be done and discussions like these definitely need to be had. Direct market access by Kenyan citizens in the U.S through a US stockbroker like. etrade, tdameritrade or optionsexpress would definitely help inject the volume,capital and buoyancy that would catapult the NSE to greater heights that would lead to more institutional investors. Perhaps the NSE should engage some of the US brokers . A huge chunk of the kshs. 45billion(YTD 2013) funnelled by the diaspora could now become part of the NSE trading activity. .
I am a university student in Kenya and interested in trading on the stock market.
What is the minimum amount I need to start, specifically with NIC.
Thanks in advance,
Benson
Hi Benson,
Samuel can correct me if this has changed, but NIC does not require a minimum amount to open an account. Each trade, however, must be for a minimum of 100 shares. So, depending on the company you are interested in, you will likely need to invest at least Ksh300 and perhaps as much as Ksh50,000 if you wish to purchase a share like Limuru Tea, which is currently priced at Ksh490.00 per share.
Happy investing!
Ryan
I can only say thank you to Ryan, Simon and all those who asked questions. Almost all my questions if not all have been answered. I am more knowledgeable now, though I know I still have a lot to learn. I am also a student/beginner looking to invest in the NSE and I must say this article has been of great help.
Thanks, Mike. I’m glad to hear it. Keep us posted on your investing adventures!
Hello,
Is it possible for me in Kenya to have an account with a stockbroker in the United States? Would you have a list of the stockbrokers to contact in the US, and what is the minimum amount required for investing?
Hi Francis,
I think your best bet is Interactive Brokers. I’m not certain they accept Kenyan clients, but they do accept some other foreign citizens. The minimum to open an account is $10,000, unless you are younger than age 26, in which case the minimum is $3,000.
All the best,
Ryan
Hello,
Thanks for the info. Specifically, I’m looking to make investments in the US based on recommendations in an online publication from the US (Daily Wealth) that I’ve been following for a while now, which is why I’m looking for a stockbroker in the US.
Scottrade is your best online broker that accepts international accounts. Minimum to open an account is $500. Fees per trade are $7 per trade for stocks trading above $1. Otherwise penny stock fees are $7 plus 5% of the overall purchase for stocks trading for less than $1. FYI…you can use the $500 to purchase stocks. If you are a beginner, do not open a margin account. A margin account allows one to short stocks and the minimum to open a margin account is $25,000. Since you want to make money when stocks go up, you need to open the regular account for $500. Scottrade has inter-banking wire transfers, so once you sell your shares, they can wire the money directly to your account. You can also buy more shares using wire transfers. If you are looking for cheap stocks with potential, look at stocks in the mobile and gaming industries, even though they are mostly cyclical. i.e, their share prices spike only after the 4th quater results are out. exaples include GLUU, MCZ, etc. for long term stocks with potential, look at NOK and TRQ. You may need to learn ratios like EPS & PE to help you determine whether a stock is overvalued or undervalued. You only make money with undervalued stock because of potential to go up.
Great info, Edward.
Do you know whether Scottrade will open a trading account for a Kenyan citizen who does not reside in the US? I get a lot of questions from foreign investors wanting to invest on the NYSE and Nasdaq.
Scottrade has always had trading accounts for foreign nationals who are not U. S. residents. However, there are numerous paperwork that must be filled out for tax purposes and for prevention of money laundering. All these paperwork is available online at scottrade.com. I will do a detailed research on the entire process and paperwork required, and will post the info here.
Hi Ryan, that was very educative. Exactly what i was looking for and am happy i bumped into it. The thing is, am an outgoing student and would like to invest long term. Which companies can you recommend? And say i was to open an CDSC account with NIC, would i still have to worry about the companies they invest my money in or would it be completely up to them? Please reply…
Hello,
So far I have not been successful in my search for a US stockbroker. While Scottrade do not cater for my geographical area (yet), Interactive Brokers require their clients to have a level of investor expertise I’m yet to attain (I’m just starting out in the world of investors).
Any other suggestions you might have for US stockbrokers I could contact are very welcome.
Is there a ‘crowdfunding’ opportunity in Kenya through online investment portals? How is this done? Thank you.
i like these.
Just what i needed on NSE. Though am sure i have a lot more to learn on stock market.
Glad to hear it, Morris. If you have questions, don’t hesitate to ask!
hi,
Was wondering how do I trade shares in the US when am a Kenyan
hi,can people merge or sort of partner to invest more money?
I am so interested in investing in stocks,kindly do furnish me with what i need to do and when does one considered to have made a good return in this business.
please advise me which options is better between Unit Trust and Stock Brokers?
Hi Daniel,
Are you asking whether to invest in a unit trust or to open a brokerage account? If so, the answer depends a bit on your interest in learning how to invest in shares. If you don’t have time or the desire to research the prospects and fundamentals of a company or to decide when to buy or sell shares, a unit trust is a good option. If, on the other hand, you enjoy constructing and managing your own portfolio, a brokerage account gives you that option.
Happy investing!
Ryan
Wow, really impressed in this article and the comments. Thanks Ryan for feeding us with such information and to the rest too for your contribution. I have learned a bunch of information, and I am excited to have bumped in here. Thank you again!
I decided to actively participate in trading of shares from late last year. I needed cash and opted to offload some shares. The problem have arisen coz three weeks have gone by and my money is nowhere to be seen.
Please advice me which other firms offers an online trading platform other than Dyer and Blair Ltd
Thank you.
Sophia
Try CFC Stanbic Financial Services – I am there and the experience is great.
Hi Johness. Please enlighten me. how did you start having all the info about investment opportunities.
Developed interest in following business news and reviews in the print and electronic media. The web is great, You can also get into company websites and read their investors page.
Which brokers in kenya with online trading forum?
good info there. Thanks alot Samuel.
Where would i find the CDSC offices in Nairobi.
Nation Centre 10th Floor Tel 2229406 – 08 & 0724 256 130 , 0733 222 033
email helpdesk@cdsckenya.com
hey, my question is do kenyan brokerage firms offer online platforms
This is very educative..thanks
I’m glad to hear that, Fridah. Thanks so much for stopping by!
Im a kenyan currently living and working in Dubai, can you kindly guide me on the way to start cuz am new to stock market but i would really like to invest
Hello, I have experience trading forex market and binary options..am looking to be an agent for any stock brokerage company, do you have any leads I can follow on?
Hi James,
I’m afraid I don’t, but here’s a list of brokers that operate on the NSE.
https://www.nse.co.ke/member-firms/firms.html
Wishing you all the best on your search!
Been looking for beginners’ info about the stock market and sure enough have stumbled upon it here, I have a routemap now. Thanks Ryan and the crew.
Thanks a lot for the info. This is so educative.
So happy you found it helpful, David. Thanks!
Hi guys. Does anyone know whether Kenyan companies which are listed at the NSE post 10 K filings like the American companies? If so, how can I access them? I wanted to try and pick stocks on my own.
i want to invest on shares please advice on best companies
Hi Ryan,
I have just started trading NSE stocks online through DBIB. However, there seems some hidden charges I cant comprehend, like today, I placed an order of 100 of Longhorn publishers at 15.95. The order value thus, was 1,595, a brokerage fee of 28.39 and Tr. Charges of 6.10. This would bring the total charges to KES 1,629.49. Yet the total I was charged for that order was KES 2,129.495 which is 500.005 excess of the expected charges. What could be the reason?
My experience: Very interesting experience. Last month I made a call to them asking how I could start trading using their platform. They told me to open an account and pay a monthly Kshs. 100 account maintenance fee up and above the brokerage and transaction fees! Could they have charged you Kshs. 500 for the period to December? I strongly advise you visit or give them a call.
Happy trading
Thank you for a great website, Ryan!
I’m a European wanting to invest in the NSE. Which broker should I choose? I would appreciate a working online platform and high quality market information. Does anyone have any recommendations?
I read through this thread but it didn’t help at all: http://www.wazua.co.ke/forum.aspx?g=posts&t=11033
Thanks, JR!
I’ve heard good things about online trading at SBG Securities:
http://www.sbgsecurities.co.ke/standimg/Kenya/sgbsecurities/index.html
Dyer and Blair also has an online trading platform: http://www.dyerandblair.com/
I haven’t seen research from either of these brokers recently, but I am impressed with the research that I receive from Kestrel Capital and Old Mutual Kenya. Neither of them offer online trading, however, as far as I’m aware.
Thank you for the reply, Ryan!
I’m in the process of opening an account SBG. However, it turns out I need a Kenyan bank account for dividend disposal if I don’t want them sending checks via post.
This has turned out to be problematic because, for example, CFC Stanbic requires me to be in Kenya in person in order to open an account. Any recommendations for a banking service provider?
I had written them to inquire on how to go about it. actually today and the only hinderance is that im not in Kenya. Any recommendations highly apprecited…..
I am a Kenyan stock day trader based in the US. My question is this. Where are we in implementing the online stock trading in Kenya where traders can actually enter there own buy and sell orders at the click of a button without having to contact their broker. If this is implemented, this will bring in a lot of liquidity in the market and thus offer more opportunities due to the price movements.
I missed the above comment. I think it answers my question. But if you would like to add a comment, please feel free.
I would like to know the process of starting online trading in kenya.
Hello Ryan,
Thank you for informative analysis. I have gained enough skills through your post and am planning to visit my stock broker. Am thinking of buying KPLC shares they are currently do expansions and moving into more reliable and cheap mode of electricity generation also keeping in mind the P/E ratio on 10 unloved Kenyan Stocks. Keep up the Good work. God bless!
Regards,
Enock
hi Ryan… I am a student planning to get high motivation on Kenya investments. it will be my wish to buy the kplc shares. I will really appreciate if you advice me. thank you.
Hi Karen,
It’s great that you’ve already developed an interest in investing.
Before you do, I would advise that you save an emergency fund equal to approximately six months of your living expenses. Deposit this emergency fund in a savings account that pays interest at a higher rate than inflation.
After this, I suggest that you pay off any high-interest debt that you have. This is a guaranteed way to get a return on your money, and it will allow you to save more quickly in the future.
If you’ve completed both of these, then it’s time to begin thinking about opening a share trading account with a stock broker. You can follow the steps in the article above. KPLC is a nice stock to start with. It pays a healthy dividend and should benefit from all of the new power plants that are adding electricity to the grid.
Hope this helps and keep us posted on your progress!
Ryan
Hi Ryan
i am in the process of opening a brokerage account in Kenya but am unable to open a bank account (for dividends) as I am a foreigner. Do you have any suggestions please??
Hallo Sir
Thank you for the info on investing in stocks. As a youth I believe I can now start investing in stocks by following your advice always. The gov’t has floated the idea of introducing capital gains tax, so please explain to me how this might affect me as an investor. Please also assist with the twitter and facebook accounts.
Thank you and once again good job.
Zedekiah Odhiambo
Great question, Zeddy.
As I understand it, the Kenyan government has approved a capital gains tax of 5%. What does this mean to you as an investor? Well, suppose you bought a stock at a price of 100 shillings per share. Over the next year, the price of the share increases to 120 shillings per share. If you decide to sell the shares at that time, your capital gain would be 20 shillings per share (Ksh120 – Ksh100 = Ksh20). This capital gain will be taxed at a rate of 5% (Ksh20 x 5% = Ksh1). So, after capital gains tax, the return on your investment is Ksh19 per share (Ksh20 – Ksh1 = Ksh19).
Hope this helps and happy investing!
Hi Ryan,
Following Zeddy’s question, what are the other tax implications for foreigners investing in the NSE. For instance, I know dividends and interest bearing accounts are taxed at 10% for local investors. Do foreigners investing in NSE attract different tax rates?. Also, do they need to lodge an annual tax return with KRA?
Hi Lancelot,
I may be wrong, but my understanding is that the withholding tax on dividends and interest income is 5% for Kenyan residents and/or citizens of the East African Community. Everyone else is taxed at 10%. Because it is a withholding tax, non-Kenyans do not need to file a tax return with the KRA.
I’m not sure how common this is outside the USA, but American citizens can avoid double taxation of their Kenyan investment income through use of the Foreign Tax Credit. The amount paid in Kenyan withholding tax can be used to reduce taxes owed to the IRS.
Hope this helps and thanks for the great questions!
Thanks alot that was very helpful. Now let me start scouting for a broker and start investing. Bye
Great! Keep us posted on how things go for you, Zeddy.
Hello…I was wondering if there are companies in Kenya that allow for direct stock purchase and if there are I would like a list.
Hi Nelly,
I’m not aware of any Kenyan companies that allow investors to purchase stock directly.
Ryan
Hi RYAN,
I’M a student involved in a competition running for four months with a capital of 5 million.Please advice on which shares to purchase in such a short period for me to earn the highest portfolio.Is it advisable to place bonds?Should I buy shares from the day’s gainers or losers?Should I buy the cheapest shares or those with high prices?What maximum share should I buy in each company selling shares?What are the figures in the NSE data should I check to decide on which company to invest in?
Regards,
ISAAC
Hi, am a Kenyan citizen and would like to start investing in NSE
what is the minimum amount that I have to start with for my investment, that is in Kenyan shillings
reply plz thenx
Hi Peter,
Great to hear that you’re considering investing in Kenyan stocks.
As far as I know, most Kenyan brokers do not require a minimum amount to begin investing, but many will require that you purchase at least 100 shares of stock per transaction. Therefore if the stock is trading at Ksh15.00 per share, you will need Ksh1500 plus commissions and fees to execute the transaction. Commissions and fees are 2.1% of the total trade amount. So, in our example, KShs1500 x 2.1% = Kshs 31.50.
Happy investing!
What a conversation Ryan! This is incredible. You have opened my eyes. I now look at the world with economic lenses.
I have learned so much from this conversation. I hope you are still keyed in because I will be back for more.
Bless you
Thanks, Nelson! We’ve got a fantastic group of readers. I’m glad you’re one of them, and hope that you’ll stay tuned for new articles coming soon.
Hi Ryan,
Thanks for sharing your knowledge and expertise on Africa Stock Markets.
I am new to this and I was just wondering what the difference would be opening an account with KCB versus say SBG or Dyer and Blair. Is there any advantage that one would enjoy?
Thanks!
Hi Ryan, I am 17 and from Saudi Arabia. I live with my parents and I have 5300USD in Savings and I wish to invest those in the Nairobi Securities Exchange ESPECIALLY IN Media and Advertisement stocks. So I wish that you guide me on where and how to do so. I wish that the method be online so it be easier for me to access the trades.
Thanks
Please which stock broking orm can i use to buy kenyan stocks online.
Hie . I hope I find well. what are the exact documents required for one to open CDSS account in Nairobi Kenya. I am a Zimbabwean staying in Zimbabwe
Hi,
I had opened an CDS account with suntra investments through KCB. Now i want to trade actively online through your bank. In mobile app, an app for my tablet and my PC. What do i need to do and if i was to open another cds account what do i need?
How safe is the online platform and if I am only trading and money remaining in my trading account including dividends is there a risk of my capital decreasing due to govt taxes
Hi Ryan, kindly guide me on how to calculate my profit gained from trading shares. Thanks
Hi David,
Good question. The formula is: (selling price + dividends) – (purchase price + commissions) = profit
You should write and article catering for questions arising from citizens of Kenya.
What is the minimum number of shares I have to buy when I am investing in any quoted company at NSE Kenya???
Hi Wol,
You must purchase at least 100 shares when buying and selling stock in Kenya.
P.S. Good idea about the article for Kenya investors. In the meantime, feel free to post questions here, and I will respond as best I can!
I am interested to know all about the stock market..please help me to understand it and profit from it..please help
nice guidance, do you offer a one on one guidance like via the phone.?
Hi Oscar,
Unfortunately, I don’t have sufficient bandwidth to offer one-on-one coaching at the moment, but feel free to email me at ryan@investinginafrica.net with any questions, and I will do my best to get back to you.
What is the minimum amount a recent graduate can begin investing with?
Hi Rose,
You can invest as little as the amount required to purchase 100 shares of stock plus commission and fees. This amount varies from day to day and from stock to stock. At the moment (Oct 12, 2016) the stock with the lowest share price is Atlas Development and Support Services with a share price of KES1.00. The minimum amount you could invest therefore is KES100.00 plus commission and fees of KES1.55. If, however, you’d like to invest in Safaricom, which currently trades at KES20.00 per share, your minimum investment amount would be KES2000.00 plus commission and fees of KES31.00.
It’s important to note that a company with a low share price is not necessarily a bargain. To increase the odds of investment success, an investor should assess the company’s current earnings and growth prospects in relation to its share price.
Hope this helps!
Hi Ryan,
Can you please provide the best website where the kenyan stocks are historically listed? charts etc.
Thanks,
Hi Peter,
Here’s the one that I turn to most frequently:
https://www.investing.com/markets/kenya
All the best,
Ryan
hello I’m Loropeta a kenyan
I want the process and requirements that allow one to a shareholder on NSE market
Hi Loropeta,
As a Kenyan, the process is pretty straightforward. The first step is to visit the office of a registered broker and ask to open a trading account. (I suggest using one of the brokers above.) The broker will assist you with opening a CDS account (an electronic account that records the shares that you own).
When visiting the broker, be sure to bring (or prepare to provide) the following:
– a copy of your ID
– a copy of your KRA PIN
– two passport photos
– your bank details
– your contact info
– your physical address
Most brokers will allow you to open an account for free, but when you purchase shares you must purchase at least 100 at a time. For example, if you would like to become a shareholder of Safaricom, which is currently priced at Ksh29.00 per share, you will need to invest Ksh2900.00 plus commission and fees (which amount to roughly 2.00% of the total transaction amount). Commission and fees in this case would amount to Ksh58.00.
To purchase shares, you simply instruct your broker which company you would like to buy and what price you are willing to pay. You can see a list of current share prices here:
https://www.nse.co.ke/market-statistics/equity-statistics.html
Hope this helps. Have fun and let me know if you have questions!
As part of development agenda has the African continent focused a lot on infrastructure development as opposed to social development……….
I would agree with that generally. It’s tough for either one to be sustainable without the other.