On Monday, a fifth company listed shares on the Rwanda Stock Exchange (RSE), raising hopes that the development will diversify and revitalise the stock market. Nairobi Stock Exchange listed Uchumi Supermarket floated 265,426,614 ordinary shares on the local bourse valued at Rwf38 each.
True, Uchumi’s cross-listing gives investors a wide range of products where to invest their money. It is also hoped to attract more activity at the stock market, especially from Rwandan investors. The bourse has for long been a two-horse affair, with only two of the previously four listed firms dominating business.
Bank of Kigali and Bralirwa have been the most active counters on the bourse, with cross-listed Kenyan firms, Nation Media Group and Kenya Commercial Bank, barely trading. According to stock brokers, the two firms’ counters sometimes take two months without business.
So will the cross-listing of Uchumi reinvigorate the stock market? This will depend on whether the Capital Markets Authority (CMA) and RSE use the development to attract more investors, and also sensitise the public on the benefits of buying shares and how they can transact business on the bourse.
According to analysts, most Rwandans do not understand how the stock market works. So, it is only logical for CMA and RSE to conduct sensitisation drives to demystify the stock exchange. RSE should also hasten the automation and interconnectivity of the bourse with other regional stock markets to ease trading of the cross-listed firms’ shares.
Also, developing an alternative market for SMEs, which would encourage participation of local companies, is long overdue. RSE should, therefore, focus on these issues, as well as enacting enabling laws and guidelines for the alternative market to attract more firms to list on the bourse.
If local firms understand that they can secure more money to grow their businesses, as well as the other opportunities listing on the stock market presents, they will surely come on board.