Financial institutions entry spike search for dealers

By John Otini
Friday, September 25th, 2020
Nairobi Securities Exchange. Photo/PD/FILE
In summary
    • The Nairobi Securities Exchange is dominated by foreign investors with very little local activity and brokers have been reducing their activities in retail investment in favour of larger volumes, most of which come from corporates and foreign investors.
    • Employers are reorganising their departments after the wait and see period of the Covid-19 pandemic when everything has been put on hold.

Kenya’s financial sector has witnessed a surge in demand for market analysts which has forced stock brokers to raid each other’s dealing rooms for experts in order to attract investors.

KCB Capital and Sterling Capital among other private equity firms to tap the research departments of established players to cement their position in an increasing competitive market whose margins have been shrinking fast.

KCB recently tapped Genghis Capital for equity analyst Patrick Mumu and Kingdom Securities for Marceline Gatebi while Sterling Capital tapped Joy De Souza from Genghis Capital having tapped Renaldo De Souza earlier to head the department.

“Research analysts are now in high demand because you need concrete research to convince investors to deal with you given a highly competitive environment,” said Michael Mwakio of Suntra Investment Bank.

Heavy competition in the market following the entry of banks and other players has seen a sharp drop in earnings among market players forcing them to operate with skeleton staff.

 “It’s a season of hiring it appears. The industry has also expanded so we now have more players in private equity, corporate finance, fund managers and all these people need analysts,” said Churchill Ogutu, fixed income analyst at Genghis Capital.

Reduced earnings have seen the brokerages houses lose staff to alternative sectors such as Private Equity and Fintech with some firms considering option out options. 

African Alliance had earlier announced that it will shut its stock brokerage section in June 2020 due to declining business just months after the merger of Apex and AIB Capital. 

Some of the employees were fired as others moved into private advisories.

Cooperative Bank, KCB Capital, Barclays, CBA, Equity Bank moved into the market with huge capital but earnings from the sector failed to match their expectations.

“I think banks came to realize that just having money alone is not enough, you need really good people and you also need to develop your area of expertise whether its retail or corporate or high net worth individuals,” said Mwakio.

Cytonn Investment has also lost a host of employees since late last year running into the current year.

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