Sunday, May 11, 2014

CRDB cross listing into nairobi bourse lauded

By The Citizen Reporter

Arusha. Shareholders with the CRDB Bank have welcomed the decision to cross list its shares into the Nairobi Stock Exchange (NSE).

Speaking at the bank’s Annual General Meeting here yesterday, shareholders said that by crossing into NSE, the volume of trade of the bank’s shares would go up and ultimately push up prices, as well as returns to shareholders. Mr Iddi Rajabu Chongi from Moshi in Kilimanjaro Region said, expanding wings to the Nairobi’s bourse was an important step that would help tap market opportunities in the East African region.

But he cautioned the management to take all necessary precautions to ensure there is smooth entrance and growth.

For his part, Mr Laurean Malauri, a shareholder and stock broker said, the business at the Dar es Salaam Stock Exchange (DSE) is still small thus the bank’s decision to cross list into another bourse means the liquidity in buying and selling will definitely go up.

Also the cross listing of the CRDB stock to the NSE was important because about 50 per cent of the ownership of the shares at the bank is retail where selling and buying is at most times dictated by circumstances.

But on firms where majority shareholders are large companies, trading of shares has a different structure because they focus on future benefits instead of the short term advantages.

Similarly, by lifting the restrictions imposed by the government on foreign participation at the bourse, will be an important solution to intensify and make the local market more vibrant. He said the cross listed firms at the Dar bourse were currently trading is low due to the restrictions.

Some of the cross listed stocks at the Dar bourse are the Nation Media Group, Kenya Airways, East African Breweries, Kenya Commercial Bank and Jubilee Insurance.

However, Mr Abeid Mwasajone, expressed worries on how the bank could benefit from cross listing while the prices of the shares was still very low. Responding to the question, the CRDB bank Managing Director Dr Charles Kimei said with cross listing, the bank will benefit from price discovery because, most shares at the Dar bourse, including CRDB were still undervalued.

“If we were to compute the book value of shares, the CRDB shares could have been valued to over 500 shillings from the 310 currently,” he noted.