Foreigners good for the market

• Due to continued stream of buying and selling, prices of specific counters reflect market value

What of ownership? The trend by foreign investors is that of maximisation of growth opportunities. They seek to tap into the competitive returns in our markets, which can range between 10 per cent to 50 per cent or more owing to the fact that our market is nascent.

In fact, out of the 55 listed companies on the bourse, only 12 companies have significant foreign shareholding (less than 30 per cent), and half of these companies are multinational subsidiaries. Majority of the companies have local shareholders.

Capital markets are increasingly becoming globalised and there is a constant challenge to represent an attractive platform for accessing capital. The ability of a bourse to tap into the international spheres for capital acquisition is a positive trait and it would be in our interest to facilitate this through increasing the free float available for purchase in the secondary market.

However, it is important to realise that the long-term stability of the domestic financial market is better assured if there is larger proportion of domestic portfolio flows relative to foreign portfolio flows.

Mr Mwangi is the Chief Executive of the Nairobi Stock Exchange