NSE 2015 net earnings down 4.5% on lower trading

The introduction of the capital gains tax in 2015 has had a negative impact of the financial performance of the Nairobi Securities Exchange (NSE).

The NSE saw its net profit drop 4.5 percent to Sh305.6 million as its total income fell to Sh821.9 million.

During the year under review, equity turnover dropped three percent from Sh431 billion in 2014 to Sh419 billion shillings.

“The decrease was as a result of the introduction of Capital Gains Tax that had a negative effect on trading activity in the bond and equity markets,” the NSE said in a statement.

Uncertainty gripped the market during the first quarter of 2015, with investors and brokers alike not sure how to apply the tax. Parliament later scraped the tax after brokers at one point threatened to stop trading.

Introduction of new products and restructuring of the organization saw Administrative expenses increased by 15.1 percent to Sh448.3 million.

The Exchange plans to introduce the derivatives market this to boost trading activity at the bourse.

Looking ahead, the bourse will be seeking to increase the number of listings on the Growth Enterprise Market Segment (GEMS) and the Real Estate Investment Trusts (REITS).

The Stanlib income REIT is currently listed on the bourse, while Fusion capital plans to issue and list two development REITS later this year.

“During the year, the Exchange will also be upgrading the Automated Trading System (ATS) which will allow it to offer more availability to its trading members and better support its new product and service offerings,” the NSE said.

The board has recommended a dividend of 49 cents per share.