NSE CEO Geoffrey Odundo on half-year performance, listing outlook

The Nairobi Securities Exchange (NSE) half-year net profit declined by 30% to 77.4 million Kenyan shillings from 110.7 million Kenyan shillings for the six months that ended on 30th June 2020. The CEO of NSE, Geoffrey Odundo, joined CNBC Africa for an insightful interview to shed light on the performance of the exchange, the challenges faced, and the plans for the upcoming months. Geoffrey Odundo addressed the impact of the ongoing COVID-19 pandemic on the market, stating that the escalation of cases in Kenya, with approximately 164,000 cases and 3,000 deaths, has continued to pose challenges. Investors have been turning to fixed-income investments to avoid volatility, leading to a decline in equity turnover. However, Odundo expressed optimism for the second half of the year, citing the opening up of economies and increasing vaccination rates globally as potential drivers for a stronger performance. Key Points: 1. Impact of COVID-19 on Market Performance: Odundo highlighted the adverse effects of the pandemic on the NSE, with investors focusing more on fixed-income securities. The equity market saw a 16% decline, while the bond market witnessed a 60% increase in turnover, indicating a shift in investor preferences. 2. Revenue Streams and Product Development: The NSE CEO discussed the decline in profit before tax, emphasizing the importance of revenue streams beyond equity trading. The exchange has been focusing on expanding its product offerings, including derivatives, ETFs, and real estate investment trust products, to cater to investor needs and mitigate market exposure. 3. Future Outlook and Listing Plans: Odundo shared plans for dividend payout, stating that the NSE did not declare a dividend for the past half-year due to declining profits. However, there is a possibility of declaring a final dividend based on annual performance. The exchange is optimistic about closing the year with new listings, including a mining company and a manufacturing company, to attract more capital inflow and support Kenya's position as a financial hub. In addition to the market challenges, Odundo discussed the NSE's role in supporting the Nairobi International Financial Center's growth, highlighting collaborations with international partners like the London Stock Exchange to enhance listings, regulation harmonization, and technology integration. The NSE's ranking on the Morgan Stanley capital markets index in frontier markets further positions it as an attractive destination for foreign investors. In conclusion, despite the challenges posed by the pandemic, the NSE remains focused on diversifying its revenue streams, expanding product offerings, and attracting foreign investment to drive growth and resilience in the market. As the global economy adjusts to the ongoing crisis, the NSE's strategies and partnerships are poised to set the stage for a more vibrant and robust second half of the year.