Cross-listed KCB banks on electronic trading

By Patrick Kagenda

At the dot of its tenth anniversary, Uganda Securities Exchange listed its tenth company. KCB was cross listed at 11:00a.m on Nov 11 amid excitement from stock brokers and equity managers.

“The cross listing means Ugandans can now have access to the KCB counter and it adds more profile on the Ugandan stock market,” said USE Executive Director Simon Rutega.

“It has added variety on the market as it prepares for regional integration,” said Edward Ruyonga, Manager Equity stock brokerage a subsidiary of Orient Bank.

“Not only has cross listing brought a regional presence which is good for the market, It is a confidence building measure for USE considering the world financial crisis,” said African Alliance Stock Brokerage, Investment General Manager Kenneth Kitariko. But for KCB Group Chairman Peter W. Muthoka it was a question of timing.

“This is the right time to cross list,” he said, “KCB has strong fundamentals worth $2.8 billion.”

The KCB cross-listing brings to four the number of Kenyan cross-listed companies on the Ugandan bourse, the others being Jubilee Holdings, Kenya Airways, and East African Breweries Ltd. It increases USE market capitalization to Shs 6.2 trillion making it the second largest in East Africa . KCB has over 2.2 billion shares cross listed and their pricing will be determined by the market. After cross listing at USE, 15,000 shares were traded at between Shs 580 and 590. Musa Nsubuga a sales and trade analyst at MBEA stock brokerage said KCB`s cross listing will boost the market as the bank holds good stock at Nairobi Stock Exchange. “It has added a profile on the USE and this will boost our people’s appetite to invest in stock of such strong institutions as KCB” said Nsubuga.

According to KCB, its shares have over the past seven years performed consistently winning the Africa investor award for the best performing company among Africa’s top 40 companies in 2007.

In their quarterly release for the third quarter 2008 KCB group reported a 64% increase in profitability and their assets were estimated at over Shs 4.4 trillion making their business the largest by asset in the region.

The bank implemented the cross listing simultaneously on USE and Daresaalam Stock Exchange. It is considering a similar arrangement for the Kigali Stock market when it finally enters the market next year.

But apprehension remains, not least because of the bearish swing on the Uganda bourse due to global financial crisis and the reality of bruised Ugandan investors still moruning the under performance of the Safaricom shares. The recent low transactions on the Ugandan bourse have been attributed to Uganda lagging behind in implementing the Central Depository Settlement law which was only passed towards the end of October. CDS being electronic fastens work.

Mr Rutega was optimistic the KCB would benefit from enhanced trading when the bourse goes electronic after the passing of the CDS law.