RSE depository link with regional exchanges excites dealers, investors

The linking of the Rwanda Stock Exchange’s (RSE) central depository with regional stock markets’ depositories will stimulate activity at the local bourse, brokers and sector experts have said. A central depository system electronically converts physical paper certificates of shares or other debt and derivatives representing ownership of securities. The linking of the RSE early this month provides an easier mechanism of transferring shares across the Rwanda, Kenya, Uganda and Tanzania stock exchanges, according to RSE officials. “It will now take less than two hours from one exchange market to the other in the four countries, a huge decrease compared to before when it used to take over three months,” Celestin Rwabukumba, the chief executive officer of the Rwanda Stock Exchange said in an interview with the Business Times over the weekend. He said Uchumi Supermarkets’ shares have already been transferred to the Rwandan central depository since the switch. He added that they were working to have Nation Media Group and Kenya Commercial Bank shares transferred as well. Rwabukumba said the Uchumi counter was able to trade 500 shares at Rwf165 each, earning Rwf82,500, last Monday thanks to the new development. “This is good news for the regional stock exchanges… It is going to increase the number of investments, especially as far as the Rwanda Stock Exchange in concerned,” said Edwina Mulanga, the manager of custodian services at KCB Bank Rwanda. Mulanga said before, if someone wanted to buy the bank’s shares, they had to first go to the bank group’s headquarters in Nairobi to create an account. “Although what is remaining is to transfer the KCB Bank group shares to the Rwandan depository and converting the paper share certificates into an electronic form, it will no longer be necessary for a Rwandan investor to go to Nairobi before buying shares,” she said. “Such an individual would even come back when the share price has changed and he or she no longer wanted to trade.” Mulanga said the development had eased procedures and will definitely bolster activity of the bank’s stocks that rarely trade on the local bourse. KCB group cross-listed on the local bourse in 2009, and was joined the following year by Kenyan media giant Nation Media Group. Uchumi became the third Kenyan company to cross-list on the Rwandan exchange in October last year. Jean Aime Habimana, a stock broker with Standard Bank Group Securities in Kigali, said the process will boost investor confidence, among both offshore and local investors. “Activity will be much higher at the stock exchange, especially for the cross-listed companies. We are also set to see more fluctuations in the share prices because, in case you didn’t notice, the share prices of the three cross-listed firms are low compared to what they cost at the Nairobi Stock Exchange because of their low trade volumes here,” he said. Habimana was optimistic the linkage was an assurance that this year would be very active compared to last year, which ended with the local bourse as the best performer in East Africa. The Rwanda Stock Exchange share index rose by over 130 per cent from 100 points at the start of 2013 to close the year at 234 points, driven by a strong share price race from Bralirwa and Bank of Kigali, which rose to Rwf848 and Rwf250 respectively, year-on-year from Rwf630 and Rwf127 at the beginning of last year, respectively.

Insight

RSE depository link with regional exchanges excites dealers, investors