Investors blame taxes for foreign exits at the bourse

Investors at the Nairobi Securities Exchange (NSE) say government policies have resulted in exit of foreign investors, leading to loss of the market capitalisation and fall of benchmark index.

Stakeholders told an investor relations conference in Nairobi that there was no adequate engagement when the government introduced taxes such as capital gain tax and ‘Robin Hood’ tax.

Investors are having to pay tax on bank transfer on buying from brokers and when getting paid by the intermediaries, at 20 per cent of the bank transaction cost.

“Initially, it was the capital gain tax, then we have the Robin Hood tax, and they (investors) feel there was no enough consultation…there was no clarity about it, how they will be affected, at what point does it kick in….and that generally has an impact on investment portfolio,” said Terry Adembesa, NSE derivatives market director.

During the third quarter, the equities market was on a significant downward trend, with NASI, NSE25 and NSE20 declining by 14.2 per cent, 15.6 per cent and 12.5 per cent respectively.

The year-to-date performance as at end of September was 12.6 per cent, 22.5 per cent and 13. 6 per cent down for NASI, NSE20 and NSE25 respectively.

Market analysts said the equities market performance during the months of July to September was shaped by declines in large caps such as NIC Group, Bamburi, Safaricom and EABL by 31 per cent, 18.5 per cent, 16.2 per cent and 13.6 per cent respectively.

Investors said there is a need for more stakeholders’ engagement before implementing various policies.

During the quarter, equities turnover declined by 32 per cent to $319.5 million (Sh31.95 billion) from $469.8 million (Sh46.98 billion) in June, taking the YTD turnover to $1.4 billion (Sh140 billion).