Browsing: stocks and bonds africa

Nairobi Securities Exchange investor sell-off in 2023

Liquidity in the stock market can simply be defined as the ability of a market to absorb large trade volumes with minimal effect on price movement. The more liquid a market is the lower the costs of transactions, the faster new entrants experience price discovery and also serves as a big attraction for foreign investors.

However, there are various challenges observed in frontier and emerging markets with low liquidity levels. Among them include limited free-float, poorly diversified investor profiles and large portions of long-term investors. Moreover, limited awareness of the market by potential domestic investors and complex market access models have been an especially enormous challenge in Africa.

Majority of Exchanges in the continent have liquidity levels below one percent (1%), with only two Exchanges recording levels of over ten percent (10%) as at May 2020- Egypt 48% and Johannesburg (45%). These have wider pools of listed companies and relatively …